"If
we act now to replace the fiat system
with a stable Dollar backed by precious
metals or commodities, the Dollar
can regain its status as the safest
store of value among all government
currencies. If not, the rest of the
world will abandon the Dollar as the
global reserve currency." ~ Ron Paul (neglects to mention the Third World destination
as consequence)

"A
grand hyper inflation of prices is
now directly ahead on the trail. It
should be ushered in with a large
crackup in the currency derivatives
market. Once this event is in process,
the paper gold markets will quickly
rush to discount against physical
gold. The discount will break our
gold market pricing and physical allocation
system." ~ FOFOA

"The
benefits of Quantitative Easing (aka
bond monetization) on stock prices
is artificial, manufactured, and fake.
The effect of same on the metals is
permanent, genuine, and real." ~ unknown

"In
short, we understand our risks, and
we believe that they are acceptable
in view of the prospective returns
that we associate with them at present.
My concern is that in the face of
very widespread complacency about
global economic recession, and the
nearly infinite faith in the redemptive
capacity of monetary policy, investors
have neither taken an inventory of
their risks, nor have any sense of
the low prospective long-term returns
(and potentially awful intermediate-term
returns) that are presently associated
with those risks." ~ John Hussman

"Andy
Xie of Caixin he says the United States
is low taxed, with government at all
levels at 24.5% of GDP, but then points
out that in the US, health care is
18% of GDP. He ignores the fact that
in most other countries, health care
is included in the government portion.
Therefore in the US
the comparable figure for government
plus health care burden is 42.5%.
One could also add in a number of
other private sector services in the
US that are actually
more or less mandatory and also are
cartelized, therefore not free market.
So to say we are small government
is meaningless in any real terms." ~ Aaron Krowne (editor of Implode-Explode)

"There
is a limited amount of gold and there
has been an unlimited amount of paper
money over the past 20 to 30 years.
Gold has a considerable store of value
that paper money does not. Gold will
be higher than it is today and certainly
a better investment than a bond or
a stock, which probably will return
only 3% to 4% over the next five to
10 years." ~ Bill Gross (PIMCO)

"There
is no more powerful bull rally breakout
than one that emerges from a long
boring consolidation, to be realized
soon with Gold." ~ the Jackass (a technical chart
axiom)

"The
latest reports I have received is
that there is basically no physical
Silver available for immediate delivery
in London. In fact, the estimated time for delivery
is further into the future than some
traders have ever experienced." ~ Patrick Heller (with eyes in London)

"The
dichotomy between weakening economic
activity and rising stock prices becomes
ever more pronounced. Over the past
few days the final August PMI data
for all the major economic regions
in the world have been released and
they continue to paint a picture of
a synchronized global contraction.
Clearly the stock market is focused
on one thing only: the promise of
more money printing by the major central
banks. This remains a potential set-up
for disappointment if they fail to
deliver to the extent that is now
widely expected." ~ Pater Tenebrarum (Acting Man)

"In
the end game, Gold is the ultimate
hedge as Gold is a hedge against both
deflation and inflation. Deflation,
characterized by a collapse in demand,
is now in motion. Inflation, perhaps
accompanied by its virulent stepsister
hyperinflation, is coming." ~ (the AU Report)

"The
response in the precious metal prices
after the Bernanke and Draghi desperate
QE decisions serve as the tip of the
iceberg or the first crack in the
snow wall before the avalanche races
down the hill. I am of the opinion
that we see Ag at $400/oz in the foreseeable
future. That will put Au at $10,000/oz
with a 1:25 Ratio. I could be wrong,
but doubt I am. It is a question of
time, like 24, 36, 48 months. Who
knows and who really cares? As long
as you hold physical precisous metal,
you can go to the beach and ignore
the weekly gyrations, deceptions,
and Kabuki theater. You will always
come out as the winner." ~ my veteran gold trader source

## INTRO GOLDEN NUGGETS

◄$$$ FACEBOOK FELL HARD AFTER ITS VERY ORDINARY EARNINGS WITH UNSPECTACULAR
FORWARD GUIDANCE. AS CITED TWO MONTHS
AGO, THIS IS A $10 STOCK, THAT POSSIBLY
A GENEROUS VIEW. $$$

The Facebook (symbol: FB) stock was under 19 per share a couple weeks ago. Enough
said. In August, a techical violation
rarely seen took place. The price
did not bounce off the 26 level, where
it once enjoyed a brief recovery in
June. Instead, it gapped down hard
from the 28 level to the 21 level,
bounced around some, then fell under
20. Its earnings outlook appears questionable,
as cited from the start. The lawsuits
have yet to register, which should
take the stock to my target of $10
per share. The rally last week was
prompted by a change in propsective
earnings growth, which should be interpreted
as Wall Street covering its short
positions and applying the public
address systems. Do not expect to
hear of the Facebook involvement as
a USGovt security agency device. One
can only hope that Goldman Sachs still
sits on this rotten paper from their
investment stake. As further evidence
of Facebook marrying Big Brother,
promotional deals are offered immediately
to people whose faces are recognized
within the Facebook database when
they enter a variety of stores. Some
might regard the technique as clever.
The Jackass regards it as sinister.
If a person is wanted for trumped
up charges of whatever fabricated
nature, he can be arrested while ordering
blue jeans, a CD, or coffee. That
is not the kind of world that teems
with liberty. See the UK Daily Mail
article (CLICK HERE).

◄$$$ THE CITY OF STOCKTON IN CALIFORNIA WENT
BANKRUPT. WALL STREET HELPED THE PROCESS
ALONG, THEIR SPECIALTY, IN A DESTRUCTIVE
VEIN. THE STOCKTON
BONDS FAILED, AFTER SOLD BY LEHMAN.
RISING PENSION BENEFITS, FALLING ASSET
FUND RETURNS, AND DECEPTION HAVE CREATED
QUICKSAND FOR SEVERAL STATES. CURIOUSLY
OREGON IS THE WORST OFF AMONG STATES. $$$

Jeffrey Michael is a finance professor in Stockton
California. He analyzed in detail the city's bankruptcy, and found
an ugly piece to the puzzle, a veritable
smoking gun. It was a dubious bond
deal that bankers had given the hard
sell to Stockton, exactly when the local economy was starting
to tank in the spring of 2007. The
city council clearly was not loaded
with Hat Trick Letter subscribers
for forewarning. Stockton sold the bonds, valued at $125 million,
so as to obtain cash to close a shortfall
in its pension plans for current and
retired city workers. Thus the name
pension bonds. The strategy backfired,
which sent the city into Chapter 9
bankruptcy. The city is attempting
to abandon the so-called pension obligation
bonds as well as to renegotiate other
debts. After reviewing an analysis
of the bond deal, underwritten by
the dead investment bank Lehman Brothers,
and watching a video recording of
the Stockton City Council meeting
where Lehman bankers pitche d the
deal, Michael concluded that "Stockton is entitled to some relief, due to deceptive and misleading
sales practices that understated the
risk. Lehman Brothers just did not
disclose all the risks of the transaction.
Their product did not work, in the
same way as if they had built a marina
for the city and then the marina collapsed."
The Stockton
marina collapsed right away.

The standard Wall Street pitch involved an attractive feature. The claim
was that the next batch of pension
obligation bonds would have an investment
grade rating, because they would be
backed by property taxes instead of
investment returns like from a particular
pension fund reliant upon a strategy.Stockton received
the pitch that it could issue municipal
bonds with a lower interest rate than
the California
state pension system, known as CalPERS.
The city council members struggled
to comprehend how the bonds would
ever be repaid, and wondered about
the unrealistic projections on the
fund growth. The case sounds like
a smaller scale disaster suffered
by Jefferson
County in Alabama, made victim
by the venerable destroyer JPMorgan.
The year that Lehman Brothers made
the deal with Stockton,
the city had a shortfall of $152 million
with CalPERS, which administers benefits
for the city's retirees. The gap appeared
because in 1999, Stockton increased the value of the pension benefits
for its workers, without making a
corresponding increase in the yearly
prepayments it sent Calpers to cover
the cost. The plan was unsuccessful.
The accounting recklessness was blatant,
but is extremely common across the
US
states. The CalPERS investments lost
about 25% of their value during the
financial turmoil that began in 2008.
As a result, the city had a separate
new debt owed to CalPERS, compounding
at 7.75% per annum, on top of its
debt to the bondholders. Stockton
found itself in an intractable bind,
with 29 more years remaining.

Financial analysts and actuarial experts claim essentially the same pitch that
swayed Stockton has been made thousands of times to local governments all
over the country, most of which went
bad, costing the cities and agencies
heavily. Since the majority of
pension obligation bonds stand on
the same basic strategy that Stockton
followed, the analysis and research
by Michael could serve as a roadmap
for avoiding such Wall Street mine
fields or perhaps for seeking court
remedy. His analysis was part
of a regional August economic forecast,
which he provided as director of the
Business
Forecasting
Center at
the University of the Pacific. He
has identified $64 billion in pension
obligation bonds outstanding. The
flow of these risk filled bonds continues,
although more slowly than a year ago.

The basic foundation of pension obligation bonds is that a city or municipality
can borrow at a lower rate of interest
than the assumed growth rate for its
pension fund assets over the long
term. The strategy is a form of
carry trade or arbitrage on the USEconomy
in effect. Often the funds are
placed in the stock market. Therefore
the interest on pension obligation
bonds, unlike muni bonds, is not tax-exempt.
The risk spreads like a cancer. Officials
in Fort Lauderdale
in Florida
were scheduled to vote on a $300 million
pension obligation bond. Hamden Connecticut had amended its charter to
allow for the bonds to rescue a city
pension fund that has been drained
dry. Oakland
California recently
issued $211 million of these bonds,
following the leaders into the pit
with stakes (not steaks) awaiting
their fall. Alicia Munnell, director
of the Center for Retirement Research
at Boston
College,
examined the outcomes for nearly
3000 pension obligation bonds issued
between 1986 and 2009. Most were not
successful, stuck in the red with
net losses. The only successful
pension bonds were issued a few decades
ago or in the wake of dramatic stock
downturns. See the tally of losses
that threatens numerous other states.

◄$$$ THE STATE OF ILLINOIS SUFFERED A CREDIT RATING DOWNGRADE, AS
PROBLEMS ARE STUCK AND NOT RESOLVABLE.
THEIR PENSION SHORTFALL IS GARGANTUAN,
CITED IN THE DOWNGRADE. PENSION FUNDS
AROUND THE NATION AND AROUND THE WORLD
MUST INCREASE THEIR GOLD ALLOCATION.
$$$

Pension problems and government gridlock led to a debt downgrade for Illinois
as another reduction in its credit
rating was handed down in late August.
Standard & Poors attributed the
rating downgrade by one notch to what
they described as weak pension funding
levels and lack of action on reform
measures. The firm also said the financial
outlook for Illinois is negative, citing the temporary income tax scheduled to
expire in 2015. Lower ratings tend
to increase the interest rate a state
must pay to borrow money and raise
funds from bonds. The downgrade (from
A+ to A) leaves Illinois
with the second worst rating from
S&P. California is rated A-, but
for some cockeyed reason it has listed
with a positive outlook from the agency.
Governor Pat Quinn acknowledges severe
public pension problems in Illinois. The state retirement systems have a $85 billion gap between
money available and what they will
eventually pay out in pensions. The
shortfall is the largest in the country.
See the New York Times article (CLICK
HERE).
The Chicago
teacher strike adds emphasis to the
state's problems. The problem is much
worse. Pension funds around the
world are in huge trouble. The major
bond yields are grossly inadequate,
and supposedly secure sovereign bonds
are big money losers. The best
investment is Gold & Silver, but
the majority of global pension funds
invest a trivial amount if any in
precious metals. Most have bylaws
that prevent it.

◄$$$ CITIGROUP FORECASTS THAT SAUDI
ARABIA WILL CEASE
TO BE AN OIL EXPORTER BY YEAR 2030.
DOMESTIC DEMAND IS FAST RISING, WHEN
OUTPUT IS IN DECLINE. THE REPORT SEEMS
GENEROUS IN THE NEARLY 20 YEARS BEFORE
AN IMPORTANT CRISIS. THEY ASSUME THE
HOUSE OF SAUD WILL BE IN POWER AT
THAT TIME. REGARDLESS, EXTREME INTERNAL
PROBLEMS WILL ARISE FROM THE ECONOMICS
OF RELENTLESS DECLINE IN FOREIGN REVENUE
INFLOWS. $$$

Ambrose Evans-Pritchard reports that not only are the Saudi oil wells gradually
turning dry, but urban energy consumption
is fast on the rise. A recent research
report released by Citigroup cites
Saudi
Arabia will cease
to be an oil exporter by 2030, far
sooner than previously thought. The
150-page report by Heidy Rehman on
the Saudi petro-chemical industry
should be sober reading for those
who regard MidEast
oil supply as endless, or believe
that shale oil & gas will come
to the rescue. The basic point
common to other Gulf oil producers
is that Saudi local consumption is
rocketing. Residential usage makes
up 50% of demand, almost two thirds
of which derives from the widespread
air conditioning. The Saudi population
wants some creature comforts. The
Citigroup report ignores a glaring
factor. The Saudi minister of security
Prince Bandar was assassinated in
August, according to my sources. The
hit was done in retaliation for Saudi
involvement in killings of Syrian
regime leaders. The Saudi regime is
precarious and suddenly unstable,
with threats from the east in Iran via HezBollah and threats from the south via
war-torn Yemen.
Oil sales and petro-chemical deals
with China will not prevent the fall of the House of
Saud. The world is starting to
awaken to the last chapter of the
Saudi ruling regime, whose end will
be the result of dwindling oil revenue,
weakened security, internal dissension,
active neglect by leaders, pressure
on its Middle Class, hoarding of $billions
in wealth, and outright moral rot.
The more palpable immediate destabilizing
factor might come from a steady decline
in external flow of funds, as less
crude oil is exported every year,
resulting in lower revenues and higher
federal deficits. Saudi Arabia already has a
staggering national debt burden. They
built up their military, the US
only too eager to sell hardware, as
the Saudi Royals have regarded their
enemies to be external and internal,
a natural byproduct of hoarding national
wealth and religious extremism.

◄$$$ SOME VERY STRANGE SIGNALS ARE FLASHING FROM BRITISH PETROLEUM. THEY
ARE PURCHASING GASOLINE FROM THE INDIAN
REFINER MANGALORE. BANKER WARS MIGHT
BE YIELDING TO GIANT SKIRMISHES CENTERED
ON OIL SUPPLY. THE UNITED
KINGDOM IS IN
A PICKLE. BP NEEDS HIGH OIL PRICES
TO KEEP THE DERIVATIVE WORLD ALIVE.
HOWEVER, IT IS KILLING THE UKECONOMY.
THE BRITISH MIGHT BE WORKING ON THEIR
OWN BYPASS OF THE IRAN SANCTIONS IN SECURING CRUDE OIL SUPPLY, IN
RESPONSE TO THEIR OWN POWERFUL DECLINE
IN NORTH SEA OIL OUTPUT. BRITAIN
MIGHT BE COURTING BETTER ARAB RELATIONS
OUT OF NEED. $$$

An unusual series of events is occurring beneath the surface in the petroleum
industry generally. Keep firmly in
mind that the USDollar is underpinned
by the defacto Petro-Dollar standard.
The Western banks are in trouble,
their basis of reserves being US$-denominated
Treasury Bonds. The many rumblings
over Iranian sanctions cut away one
or two pillars of the USDollar standard
platform. The numerous Chinese Yuan
swap facilities create the basis for
barter with several nations, conducted
outside the King Dollar realm as well.
In the midst of all this cauldron
stir, British Petroleum is in trouble.
Like the criminal enterprise Enron,
BP is a major derivative player. By
some obscene miracle, BP enjoys a
single-A rating bestowed with mercy
by all three rating agencies, despite
their multi-$billion exposure and
ongoing obligations related to the
Gulf of Mexico
wreckage ruin and subterfuge. It is
my firm opinion that both Halliburton
and British Petroleum committed grand
sabotage, with collusion from the
USGovt, protected by the Dept of Energy
(inspections not done) and the Environmental
Protection Agency (water samples doctored),
even the Coast Guard (public eye kept
at a distance, without fines levied
over dead fish and whales).

For British Petroleum to possess an 'A' rating of any kind is a farce, an injustice
to its bond holders. One notch downgrade
would likely increase the pressure
to post more collateral and cause
more selling of assets. A two notch
downgrade to high BBB would possibly
be fatal. The BP operators caused
untold damage in the Gulf
of Mexico. Only now for some unexplained
reason, the USDept Justice is now
going after them. One is left to wonder
if the some powerful players behind
the USGovt have decided to try to
shake down BP after shaking down the
UK
banks. The banker wars extending
from LIBOR might be branching out
to attack BP, establishing a second
front in the crude oil industry.
It is integrally linked to the financial
sector by means of futures and derivative
contracts. That would represent a
brush fire jump not anticipated by
the Jackass last month.

The oil front in the conflict has some billboard signals which are new and foreboding.
The BP firm is buying gasoline from
the Mangalore refinery, paying a premium.
The refiner is located on the east
coast of India,
known formally as Mangalore Refinery
& Petrochemicals Ltd. Surely BP
has not exhausted its refinery capacity.
The Mangalore firm receives the majority
of its oil from Iran,
who is selling it to BP at a premium.
Something very strange is going on
and must be dissected. The UK
appears to be working to circumvent
the Iran sanctions via this bypass route in order
to build up winter supplies. Perhaps
even they are taking measures in case
of the outbreak of a war and supply
cutoff. As intermediary, Mangalore
earns a premium and India
reduces its trade deficit. Perhaps
something even more unusual is happening,
like England
trying to establish commitments for
crude oil, with payments made largely
in British Pounds. Gadzooks! Imagine
the geopolitical impact if the United States and England
suffered a split over Iran
due to crude oil needs. Talk about
isolation for the USGovt Helm! Sounds
like potential strains on the nazi
power centers. By the way, the stubborn
rise in the crude oil price, which
remains near the $100 mark, is to
some extent a sign of Iran
supply threats. It is more a sign
of hedging against the USDollar, with
the USGovt saber rattling against
Iran
done to deflect attention.

The Jackass forecast for four years running has been for the United
States to become
isolated to the extreme when it slides
into the Third
World. The nation of England will
be fortunate not to join, having lost
much of its industry, having endured
an American-style housing market bust,
and having committed itself to the
narco wars in Iraq and Afghanistan.
Perhaps the UK
is making preparations to avoid the
fate of the Third
World dungeon. Queen Elizabeth would
be shocked to see what has become
of the British Empire, with MI6 joining
the Langley Boyz in setting off terrorist
fuses to keep the West on edge, committed
countless murders of civilians in
the name of liberty. See Operation
Gladio in past decades or the 2011
Oslo incident, if lacking relevant information.

The theory goes that UK was a net exporter of crude
oil until 2001. The nation is a net
importer with North Sea output having fallen significantly. The resurgent need
to import oil is a factor in the present
stagflation in the UKEconomy.
Hence the need to pursue better relations
with some Arab hotspots such as Iraq,
Libya, and Syria. A good gesture would be to return the Libyan
144 tons of gold bullion secured in
London banks by deposed deceased and disemboweled dictator Muammar
Qaddafi. Furthermore, the UK has grown in dependence
upon Russian natural gas, a very strange
twist. The Putin & Medvedev leadership
team has smartly tied its crude oil
prices to Gazprom dynamics, and not
to the US-based natural gas price
badly manipulated by the Wall Street
criminal trading desks. To be sure,
the Grand Master Putin is in the driver
seat.

◄$$$ THE JAPANESE FINANCE MINISTER WAS KILLED. SPECULATION IS RIPE AS
TO MOTIVE. MY BELIEF IS THAT JAPAN IS EMBRACING THE EURASIAN SPHERE LED BY CHINA & RUSSIA. THE ENTIRE EURASIAN TRADE ZONE IS BUILDING
OUT. IT EXCLUDES THE UNITED STATES.
THE RECENTLY SIGNED BILATERAL TRADE
FACILITY (BARTER DEAL) REMOVED THE
USDOLLAR AS THE TRADE VEHICLE BETWEEN
JAPAN
& CHINA. THE USGOVT IS ANGRY,
AND MIGHT HAVE SET INTO MOTION SOME
RETALIATION. $$$

Speculation rules, as no hard facts or hot source tips back up my view. However,
the extremely important bilateral
currency swap accord struck by Japan
and China
this summer could have shaken the
USDept Treasury to its core. It
probably sent numerous on staff into
sudden analysis mode for damage impact
and control. To be sure the USGovt
security agency was pressed into action
to seek out alternative solutions
via vulnerable pressure points. One
must regard the agency in Langley
as a gang of mafiosi with no bounds
on criminal actions, including murder,
bombings, and false testimony on identity
of those involved. Some heavy retaliation
is an obvious motive for the Japan-China
currency facility in bilateral trade.
The two nations are the bulwark of
Asia, with probably
75% to 80% of industrial output. To
have the dynamic Asian duo discharge
US$-based
trade is a grand shot at the USS Weimar
ship, not across its bow. It is a
monumental threat to the entire USDollar
regime. It means neither nation would
have a trade-based need to accumulate
USTreasury Bonds. Couple the bilateral
trade deal with Japanese and Chinese
purchases of crude oil from Iran in direct defiance as
a kicker motive. Other smaller pieces
to the same abandonment could be part
of the motive also, like Japan
buying natural gas from Russia.
The United
States is being
isolated from Eurasia.

Perhaps Japan is walking a narrow road, agreeing to cooperate with the QE3 run
amok by the USFed by supporting vast
USTBond purchases, but with the understanding
that they will make significant steps
toward non-US$ trade alongside China.
That would anger the USGovt security
staff in charge of defending American
honor, prestige, power, and control.
What has begun to take root in a big
way is Japan moving away from US and closer to China & Russia. The process is often referred to as the
construction of Eurasia
as a major dominant trade zone. It
is not at all USDollar centric. In
fact, the intelligent analysts believe
it is extremely anti-USDollar in its
entire threads, themes, and platforms.
It is my contention that Japan sees its survival in Eurasia
rather than with the fading US Empire
dominated by bond fraud, monetary
inflation, massive debts, and endless
vile wars.

As footnote, Taiwan and China will settle trade payments in their own
native currencies, no longer the USDollar.Taiwan
announced that trade between the powerful
island nation and Mainland China will be settled at the state-owned Bank of
Taiwan in Shanghai.
They signed a landmark currency clearing
agreement in September. The Bank of
China is expected to serve as the
clearing bank for transactions on
the Taiwan island, done in Yuan
currency. There will not be any need
to convert to USDollars any longer
for the two nations that engage in
extremely brisk trade. Taiwan is a high tech powerhouse.
The next step will be to diversify
away from USTBonds in the Taiwanese
banking system.

◄$$$ THE EURASIA TRADE ZONE IS BUILDING OUT, COMING TOGETHER, AND HERALDING
A NEW ERA. IT INCLUDES HALF THE WORLD'S
PEOPLE AND ONE THIRD OF THE WORLD'S
ECONOMY. CHINA
HAS ALWAYS BEEN THE CORE, BUT JAPAN
HAS BEEN THE SWING ELEMENT. THE UNITED
STATES IS NOT ONBOARD, OUTSIDE LOOKING
IN. $$$

A grand Asian accord to construct a mega Free Trade Agreement
was reached as a beginning step. The
conference included the trade ministers
of the 10 ASEAN countries and six
partners in Cambodia at the end of August. The six nations were China, Japan,
South
Korea, India, Australia,
and New
Zealand. The
decisions made at the meeting at Siem
Reap in Cambodia will lay more foundations for what will
most certainly turn out to be a profound
development in global economics. Refer
to the next chapter of geopolitics
that is intended to unite the fastest
growing region in the world, the total
grand continent of Europe and Asia.
The belt of the Eurasian trade zone
will be China,
Japan, Russia,
and Germany.
The Jackass has previously made frequent
reference to the Eastern
Alliance, except with emphasis given
to the currency alternative pursued
to rival or replace the USDollar.
The Eurasian trade zone is precisely
the giant arena on which any new currency
or alternative trade system will be
launched. They are like the blood
flow in the cross-continental trade
zone. The rise of Eurasia
has been discussed by the Hat Trick
Letter in the past year, not a new
concept. The trans-continental railroads
and energy pipelines serve as infrastructure.

The Eurasian Conference decided that the 16 countries will begin negotiations
at a regional summit in November to
lead Asia toward
a giant economic and free trade area.
The Regional Comprehensive Economic
Partnership (RCEP) proposal could
phenomenally transform a region with
a 3.5 billion population into an integrated
market with a combined GDP of $23
trillion. That comprises half
the world's people, and one third
of the world's current annual GDP.
It will NOT be spinning around the
USDollar axle. The grand motive is
to join together the five leading
ASEAN nations and their current Free
Trade Agreements into a single framework
that includes India.
A significant driver is Japan,
which is the surprise, and the kick
in the testicles given to the USGovt,
which has pushed the weak-kneed plan
called the Trans-Pacific Partnership.
Thus the motive to attempt to bring
Japan
back in line, to pull the US
rope, more like an American leash.
Japan instead sees the Eurasian RCEP as a vital
lifeline for the nation, since its
US-centric trade policy has come to
an impasse. Japan
has not shown any predilection or
partiality for the Trans-Pacific Partnership.
That empty platform has been pushed
by US envoys, suddenly run aground
by removing the misfit pivot. For
its part, China views the RCEP as a union of 16 nations
that holds the potential to create
a level of interdependence, if not
mutual benefit, in the Asian region.
Tensions have risen in the South China Sea in various squabbles.

The trend is for more significant nations to align with RCEP and the Eurasian
trade zone concept, like India. The emerging nation
has shown enthusiasm for the RCEP
proposal. In the final tabulation,
the Indian Free Trade Agreement with
the ASEAN alliance has lifted trade
by over 40%. Commerce Minister
Anand Sharma has pressed for early
conclusion of the negotiations to
make concrete the services and investment
agreements between India
and ASEAN. The RCEP negotiations will
be a long road to pave, but it will
happen as the natural answer to the
fading US empire turned toxic, corrupt, and aggressive.
The conference outcome demonstrated
that the extended ASEAN does not regard
the US
as pivotal at all. Alternatives are
actively sought to US-centric arenas,
market places, and systems as the
global financial system continues
to languish and collapse. The pull
of greater trade and investment through
economic partnership involving China
is influencing the Asian perspectives.
China
is destined to be the dominant partner
in the RCEP accord that shapes Eurasia. They have pulled in Japan. Despite some trade representation discussion
between the WashingtonDC and Beijing,
it is very clear that the United
States is outside
looking in. After over a decade of
trade friction and protectionism between
the US and China, the trade war is
upon us very much as the Jackass painted
between 2005 and 2009 in Hat Trick
Letter reports. My forecast was called
stupid by many dull bulbs, a source
of my amusement. China
is looking to Europe led by Germany
for its trade future, no longer to
the United States. See the Indian Punchline article
(CLICK HERE).

A savvy contact from Europe concluded, "The integration all the way
from Central Asia (possibly from Portugal
at a later date) to South
Asia via the ancient trade routes
is the natural way things should progress.
The mighty United States has nothing
really to offer in terms of real products.
Worse, it finds itself geographically
isolated. It is slowly being left
out. Everything is moving in the right
direction as you [the Jackass] have
said with the US trying to slow down the process or put obstacles
in the way."

◄$$$ GLOBAL QUANTITATIVE EASING IS THE THEME OF 2011 THAT WILL RUN INTO
2012 AND BEYOND. CHINA ANNOUNCED A GIANT STIMULUS,
BASED IN TANGIBLE PROJECTS RATHER
THAN HYPER INFLATIONARY BOND INFLATION.
CHINA
PLANTS INFLATION SEEDS
ON MAIN STREET, WHILE THE USFED PLANTS
INFLATION SEEDS IN THE FINANCIAL SECTOR.
IT IS ALL GLOBAL QE BY ANY OTHER NAME.
THE CHINESE INDUSTRIAL MIRACLE HAS
HIT A VERY SOFT PATCH. $$$

China announced in late August a stimulus
package valued at CHY 8 trillion (=US$1.265
trillion) in order to stave off the
Chinese Economic slowdown. It risks
accelerating to the downside. Coupled
with Japan, Asia has clearly joined
the USFed and EuroCB and Bank of England in Global QE, better described as QE to
Infinity. With Asia and Europe
fully committed to bond monetization,
hyper inflation, and currency debasement,
the USFed is given the green light
to proceed. The effect in damage will
be kept comparatively guarded, if
all major central banks simultaneously
commit the same heretic cardinal sins
of central banking, in debasement
of currency. The winner will be Gold,
which reacts to monetary excess and
currency expansion. Do not expect
any further Gold price declines and
corrections, not with all central
banks paddling in the same direction,
not with unsterilized bond monetization
in heavy volume on deck.

China will proceed with over $1 trillion
in major projects of various size.
Its economy is on the slow ramp. Exports
are falling. Spending is down in retail.
The Shanghai
stock index is punky. Commodity imports
are saggy. Workers are leaving the
city centers. The Beijing
leaders want to boost confidence in
an economy that could be rolling over.
Further export tax rebates could also
be applied to bail out the raft of
struggling manufacturers. Analysts
believe the Chinese Govt plans to
steer the Yuan lower, after a gain
of 4.7% last year against the USDollar.
That gain resulted in cheaper commodity
supply via import, like metals and
crude oil, but higher prices provide
headwinds for exporters. China's
export sector is suffering from feeble
demand from Europe and the United States. In the first
seven months of 2012, exports rose
7.8%, while imports rose 6.4%, which
left the July export growth level
at the lowest pace since 2009. For
the first time since the deep seated
crisis hit in 2008, reports circulate
about factory workers leaving and
returning to their home provinces.

◄$$$ THE JAPANESE CENTRAL BANK THIS WEEK ALSO CHIMED IN, WITH A NOTABLE
RAMPUP IN THEIR QE BOND BUYING PROGRAM.
THEY REACT TO THE SUDDEN RISE IN THE
JAPANESE YEN, AS THEIR EXPORT TRADE
IS AT RISK. THE GLOBAL QE IS WELL
ALONG. $$$

The Bank of Japan unexpectedly expanded its asset purchase fund by 10 trillion
Yen (=US$126 billion) this week. The
BOJ project has run for twenty years,
where it buys mainly Jap Govt Bonds.
The project was enlarged to 55 trillion
Yen in a unanimous decision by the
board, in reaction to a rise in the
nation's currency. In just a few days,
the J-Yen exchange rate made a sudden
rush to the 130 level, only to relax
following the latest in endless such
QE announcements back to 127.50 but
still not a safe level. Like the US,
the Japanese stocks jumped of joy,
dependent upon monetary flooding.
The major central banks of the world
are all devoted to bond monetization,
joined at the hip in currency debasement.
Witness the Competing Currency War
mentioned numerous times over several
years in the Hat Trick Letter. It
is intensifying. Attention on the
coordinated ruin grows.

Izuru Kato, chief market economist in Tokyo
at Totan Research, said "Whether
central banks intend it or not, there
is a competition for loosening monetary
policy around the world." BOJ
Governor Masaaki Shirakawa is stuck,
forced to compete in a race to the
bottom. The central bank removed minimum
bidding yields for purchases of government
and corporate bonds after they failed
to secure targeted amounts at some
of the buying operations. It pushed
back the completion of purchases under
the asset program to December 2013
from June 2013. Think QE to Infinity.

◄$$$ ASIAN EXPORT MACHINE SUFFERS THE ILL EFFECTS OF THE WESTERN ECONOMIC
DEPRESSION. CHINA IS NOT ALONE IN THE
EXPORT ENGINE SPUTTER THAT HAS AFFECTED
ALMOST ASIAN CYLINDERS. $$$

Mike Shedlock assembled some good summary information with graphs. He focused
on the Producer Mfg Index (PMI). The
South Korean industrial index is pointing
down, as is the Taiwan index. The Chinese
export orders fell the most since
March 2009. The Japanese PMI hit a
16-month low, as orders plunged. All
major Asian centers are going slightly
into reverse. See the Global Economic
Analysis article (CLICK HERE).

◄$$$ THE UKECONOMY FAILED TO BENEFIT FROM THE OLYMPIC VENUES. RETAIL SALES
FELL IN AUGUST. THE NET EFFECT OF
THE GAMES WAS MINIMAL. THE COST WAS
ENORMOUS. CONSUMER RETAIL SALES IS
ON THE SKIDS, AS A GRIM OUTLOOK OVERTAKES
BRITAIN. $$$

Retail sales in the United Kingdom declined in
August despite the Olympics and the
throngs of crowds in attendance. The
event failed to spur spending, according
to the British Retail Consortium.
Their focus was on the non-food sector.
Year-on-year, retail sales values
fell 0.4% on a comparable basis in
August. During the same period last
year, sales were down 0.6%, making
a trend. On a total basis with
food and restaurants included, sales
were up 1.6% in August. The net effect
of the Olympic Games was minimal.
The event affected online sales, which
grew just 4.8% on an annual basis.
That level seems strong, except that
it is the lowest pace since the Retail
Sales Monitor started collecting data
in October 2008. Curiously and ominously,
apart from the recent April distorted
by Easter timings, August saw the
worst sales growth this year. A grim
economic outlook has swept Britain, the latest survey
by GfK NOP showed last week. Perhaps
the British tabloid sales can revive
the UKEconomy, which features the
princess frontispiece. Kate shares
the wealth. Lovely gal!

##
DOLLAR ISOLATION & DECAY

◄$$$ A PERFECT STORM IS COMING WITH SOVEREIGN BOND CORROSION, BOND MONETIZATION,
GLOBAL USDOLLAR REJECTION, UNBRIDLED
USGOVT DEFICITS, AND INSOLVENT BROKEN
BANKS. RECOGNITION OF ALL ARE HAPPENING
SIMULTANEOUSLY. SO FAR THE INTEREST
RATE SWAP DEPENDENCE AND FALSE FLIGHT
TO USTBOND SAFETY HAS NOT BEEN DETECTED.
THE NEXT QE3 ROUND WILL NOT BE STERILIZED,
AS NEW MONEY WILL BE INFUSED INTO
THE SYSTEM. THE ZERO INTEREST OFFICIAL
RATE HAS BEEN DECLARED PERMANENT,
IN AN OPEN ADMISSION OF CENTRAL BANK
FAILURE. $$$

The USDollar technicals are ominous. The current price shows a dithering, a
mere pit stop at 78-79 support. Watch
for a decline below that critical
support, pushed by a bearish moving
average crossover that will attract
many traders in a pig pile. The
world is preparing for the end of
the USDollar as global reserve currency.
It is being destroyed by insolvency,
bond fraud, endless war, and hyper
monetary inflation, a truly lethal
mix. The only hope for the USDollar
to hold its value is if the other
major currencies debase at an equal
pace. All other major central banks
are in trouble with their federal
deficits and bond markets and economies.
The only saving grace for the embattled
USDollar greenback is the simultaneous
debasement in hyper-drive for the
Euro, the Yen, and the Pound Sterling.
However, the mutual debasement will
only slow the USDollar decline since
it will lose its global reserve currency
status. That path is well traveled
with bond monetization, which will
lead to an explosive move upward in
the Gold price. Gold is the ultimate
arbiter of tainted debased corrupted
money, and always has been in the
history of money.

◄$$$ MOODYS ISSUED A USGOVT DEBT OUTLOOK WARNING, WITH EMPHASIS GIVEN
TO THE BUDGET GONE OUT OF CONTROL.
THE FISCAL CLIFF HAS GAINED FOCUS
AND ATTENTION, BUT NO REACTION IN
REDUCTION IN SPENDING PATTERNS. NOTHING
HAS BEEN ADDRESSED OR REMEDIED SINCE
THE S&P DOWNGRADE OVER A YEAR
AGO. TIME IS RUNNING OUT AS THE BANK
PANDERERS IN WASHINGTON-DC RUN OUT
OF CREDIBILITY AND ROPE. IN ITS NEXT
MOVE, THE GOLD PRICE WILL MAKE ADVANCES
IN RESPONSE TO UNADDRESSED USGOVT
FISCAL RESOLVE AND BROKEN DYNAMICS
THAT WILL ONLY GROW WORSE. $$$

Moodys appears ready to jump on the debt downgrade bandwagon that so far has
only seen Standard & Poors drive
down the credit highway. Other debt
rating agencies are missing in action,
derelict in duty except for Egan Jones.
The alert little outfit Egan Jones
last week downgraded the USGovt debt
to AA- in a move hardly noticed by
the madding crowds fixated on the
QE rampup. The issues update by
Moodys on the outlook for the USGovt
debt rating is loaded with warnings
and strong language. To date,
it has not been heeded in WashingtonDC.
Moodys Investors Service anticipates
that budget negotiations during the
new 2013 Congressional legislative
session should determine the direction
of the Aaa rating and negative outlook.
They issued a report entitled "Update
of the Outlook for the US Government Debt Rating" that has not
caused enough ripples. The Beltway
Players still believe they have unlimited
liberty in deficit spending. If suggested
policies produce a stabilization and
then a downward trend in the federal
debt ratio to GDP with some quick
results, the rating will likely be
affirmed and the outlook returned
to stable. If negotiations fail
to produce constructive action, Moodys
expects to lower the rating to Aa1.
The agency dismisses the likelihood
of maintenance of the Aaa rating with
a negative outlook into 2014. Curiously,
Moodys did not mention war spending
and its deficit contributions.

The only scenario to retain temporary Aaa rating maintenance would be if debt
stabilization is achieved through
a large immediate fiscal shock that
averted a fiscal cliff. A miracle
is required for that to actual materialize.
Moodys would then require evidence
that the USEconomy could rebound from
the shock before it would consider
returning to a stable outlook. A red
herring swims freely. The rating
outlook assumes a relatively orderly
process for the increase in the statutory
USGovt debt limit, which will be reached
around the end of the 2012 year.
Dream on, as budget impasses are the
norm. Witness the futility of the
Super Committee in 2011. The ability
to meet interest and other expenses
out of available resources would be
exhausted within a few months after
the limit is reached. After the debt
limit is reached, the debt rating
would likely be placed under review,
likely several weeks before the exhaustion
of the Treasury's resources. See the
Moodys report article (CLICK HERE).

The London Siren offered some excellent views on the USGovt fiscal quagmire,
the debt downgrade, and the Gold reaction.
He is well versed in US
political economics and finance, having
been educated in the US. Quotes are hard to come by from him, since
he dispatches gem thoughts, not sentences.
Here are his points. Expect only minimal
implementation of fiscal cuts, enough
to keep the wolves at bay. If a full
boat of cuts is implemented, the fiscal
drag could be 3.5% to 4.0% of US GDP.
The assured deep recession is why
the spending cuts will be on the low
side, and therefore ineffective toward
any remedy. The USCongress working
with the Admin will probably implement
a small group of spending cuts that
result in a fiscal drag of 1% of GDP.
This will definitely not please Standard
& Poors, which will downgrade
by one more notch to mid-AA, very
likely in March. Expect Moodys to
take their own time, with a downgrade
handed down in June. It is difficult
to say when the stock market will
start to seriously show worry with
big visible beads of sweat.

The London Siren guesses when the market realizes the new upcoming Congress
in the USGovt with more Republicans
but with more Tea Party folks are
in charge. He does not foresee the
minor lift in Republicans in the Senate
will be sufficient to reach the 60
votes necessary to produce a filibuster
majority. When the new makeup of the
USGovt chambers is better laid out
and understood, only then will Gold
start rising very sharply. The Gold
price could make strong preliminary
moves if worry comes about the USGovt
debt limit being breached in October
or November. The smart money has probably
been buying Gold since last year during
the long consolidation, with months
of easy accumulation at attractive
prices, following the S&P downgrade,
realizing that the fiscal dynamics
will only get worse.

◄$$$ BASEL III CONSIDERS RAISING GOLD VALUE IN RESERVES CALCULUS. THE CHANGE
BY BANKER MASTERS INDICATES THE URGENCY.
THE TREND WILL BE TOWARD THE GOLD
STANDARD, SINCE THE BANKS, THE BONDS,
AND CURRENCIES ARE ALL RUINED. $$$

The story is not new to Hat Trick Letter readers. It reappears since so important
a signal, that bank masters who
dictate rules from castle perches
are gradually imposing the Gold Standard
in their reserves rules. A shift
is happening in the Gold market, intentionally
or unintentionally, to make gold a
more credible currency alternative.
The transition is slow and subtle,
in an attempt not to cause attention.
The Basel III changes have been talked
about in gold arenas extensively for
the last few months, since the US
Federal Reserve published proposals
in June 2012. The broad market finds
the concept esoteric since they know
little about money, even economics.

Basel III rule mavens are discussing a change that would lift the accepted value
of Gold on commercial banks balance
sheets from 50% to 100%. Basel III proposes that bank Tier-1
holdings must rise from 4% of assets
to 6%. This means that banks may not
only replace a portion of their existing
paper with bullion, but may use it
to meet some of the extra 2% as well.
Consider the impact on Gold demand
from the banks themselves, arch-enemies
of real money, merchants of paper
filth. For example, if 2% of total
current Tier-1 capital held by commercial
banks globally was converted into
Gold, this would be the equivalent
of $85 billion in new gold demand.
That is calculated as 2% of $4.276
trillion. At a base price of $1700/oz,
the 2% addition would mean 1417 tonnes
of gold. To put that amount into perspective,
that is equivalent to about 50% of
total global mine output in 2012,
estimated at 2848 tonnes forecast
by GFMS. See the 24HR Gold article
(CLICK HERE).

◄$$$ MONEY VELOCITY IS GOING DOWN AS QUICKLY AS MONEY SUPPLY IS GOING
UP. THE AMERICAN WEIMAR EXPERIMENT IS TURNING INTO A TORNADO OF FINANCIAL RUIN WITH
INADEQUATE RECOGNITION. AS INDUSTRY
WAS DISPATCHED AND FORFEITED TO ASIA,
THE USECONOMY LOST ITS BASE FOR TRACTION.
NEW MONEY HAS LOST ITS EFFECT IN PRODUCING
ECONOMIC ACTIVITY FOLLOWING A SERIES
OF ASSET BUBBLE BUSTS. NEW MONEY IS
DEVOTED TO THE FINANCIAL SECTOR IN
PERVERSE FASHION. $$$

The central bankers cannot dictate the speed at which money moves. They can
only create it and drop it in the
mix. Imagine a car engine that is
revved up to extremely high revolutions
per minute, but the car cannot engage
the crank shaft in the transmission.
The car does not move very fast. The
growth of the monetary base has been
staggering high since the financial
crisis broke in September 2008 with
the collapse of Lehman Brothers. Since
the end of August 2008, the monetary
base has risen from $877 billion to
$2,651 billion as of the report in
September 2012. That is a giant 3-fold
rise. The USEconomy is stuck in
a gripping recession. A notable growth
in the monetary aggregate took place
from 1984 to 2008, a five-fold increase
that marked a 15% annual growth rate
over the 24 years. The growth rate
in money supply in the past few years
has been 50% per year, identifying
the American Weimar era.

The massive increase in new money has done nothing to foster growth in the USEconomy.
The credit engines are broken for
business. The tax structure is ass
backwards. The housing market is broken,
leaving households insolvent. The
industrial base has been largely shipped
off to Asia, the climax occurring
after 2000 to China. The endless wars fill the pockets of the
fraud merchants known as military
service contractors, the artistic
work of ex-VP Cheney from Halliburton
infamy. The USEconomy is stuck in
a powerful recession based in grotesque
insolvency and bond fraud. As the
USFed is poised to kick in another
round of QE led by bond monetization,
the money supply will ramp sharply
up again. Do not expect much of
any economic benefit, since the cost
structure will rise again, thus shrinking
profit margins. This capital destruction
factor is a great blind spot to the
hack economists who operate more as
marketing harlots than analysts and
advisors. The Ponzi Scheme theory
dictates that an acceleration in new
money is required to keep a constant
speed. Expect more wreckage from the
stripped gears of the USEconomic engine.

The money velocity chart shows a deadly decline since 1980, and a powerful decline
since the 2007 outbreak of the absolute
bond crisis. The new money is going
to the big banks in bond redemption,
derivative coverage, and Black Hole
(Fannie Mae, AIG) fills under the
USGovt roof. The money is not finding
its way into the USEconomy for further
circulation. The plague is insolvency,
marred by bond fraud. The MZM
is a measure of the total amount of
monetary assets available in the economy
at any specific time. Generally this
contains at least the money in circulation,
demand deposits, plus money market
funds. It is an expanded version of
M2. The velocity of money is calculated
as a ratio of nominal GDP to a measure
of the money supply. It can be thought
of as the rate of turnover in the
money supply, for the purpose
of purchasing final goods and services
included in Gross Domestic Product.
The velocity of money has been falling
for years, in reflection of an economy
that is not turning over much at all.
Think of a car missing its cylinders,
spinning its gears, burning itself
out, going nowhere.

Three eras are worth identifying in my view. The Vietnam War era and its aftermath
saw huge expansion in money supply,
huge nominal income growth, and huge
increases in price inflation. The
USFed did not stop the expanded USGovt
debt from reaching Main Street, simply put. For consecutive years, the Consumer Price
Index rose over 10%, which led to
big worker pay hikes. The result was
that US corporations began to send
industry overseas. It started with
Intel going to the Pacific
Rim. The money velocity fell, as income
fell on a real basis. The climax event
was China being given
the Most Favored Nation status in
1999, which released the gates for
foreign direct investment. China
made a deal with the Wall Street devils
that has yet to gain publicity. The
hidden motive was for Wall Street
firms to borrow the Chinese gold hoard
from the Chairman Mao era, so as to
continue the great gold suppression
game that has bankrupted the United
States and betrayed
the nation. US and London bankers skimmed and stole the gold.

The money velocity has continued down, since industry is largely forfeited.
The traction offered by industry is
sorely lacking, as it is grossly inadequate
to respond to the official Zero Percent
Interest Rate policy. The US
will gradually achieve systemic failure,
suffer debt default from inability
to manage the debt structure, and
fall into the Third
World. See the Safe Haven article
(CLICK HERE). The refuge
is Gold & Silver, which will survive
the financial catastrophe, serving
as the ultimate safe haven during
the ruin of money itself.

◄$$$ OLD SILVER COINS DISPLAY THE DEBASEMENT OF THE USDOLLAR UNDER THE
PEOPLE'S NOSES WITH LITTLE AWARENESS.
THE PRE-1965 SILVER US-COINS HAVE
ALL HELD VALUE EFFECTIVELY. THEIR
CURRENT VALUE IS 20 TIMES FACE VALUE.
THE USDOLLAR IS FAST BECOMING THE
HARBINGER OF A FADED EMPIRE. OLD SILVER
COINS ARE WORTH OVER 20X THEIR ORIGINAL
FACE VALUE, SOMEDAY TO BE 50X. ADD
PREMIUM TO THE PRICE IF PURCHASED,
HEFTY PREMIUMS LIKE 10% TO 15% ON
RECENT MINTED COINS, MORE FOR OLDER
COINS. $$$

The United States continues
down the path of an historical failure
in parallel to the Roman
Empire. On the financial side, it
resembles emperor Nero on currency
matters with coin debasement. On morals
and ethics, it resembles the Roman
Empire under Caligula. The ancient
empire stole directly the gold from
inside coins, the practice given a
name of sovereignty, theft by leaders.
The leaders in wartime prison camps
routinely employed the same chicanery,
changing the weights of measure to
ensure more food for the captains.
In time more and more gold was removed
from coinage, leaving the coin of
the realm a hollow piece of metal
dung. In the modern era, the theft
had been more subtle with government
deficit spending and credit extension.
When Quantitative Easing arrived,
the theft came from more blatant egregious
bond monetization. In school during
the 1970 decade, we learned that only
Banana Republics purchase their own
federal debt with printed money. So
nowadays, the theft is hidden by the
fast Printing Pre$$ running overtime
in the central bank basements. The
leaders do worse than take bigger
meals in the monetary prison camp.
They dispensed $23 trillion in two
tranches of low-cost loans across
the globe to their banker cohorts,
partners in monetary crime, never
to be repaid. See the Wealth Wire
article (CLICK HERE).

The USDollar is worth less than two cents compared to its 1915 value when the
USFed began their handiwork. The evidence
is more clear with the value of older
coins. Determine the approximate silver
content in each of the available denominations.
By using the industry assumed standard
that $100 face value of pre-1965 quarters,
dimes and half dollars contains 71.2
ounces of silver, the following approximate
silver contents can be extrapolated:

Next determine the approximate value of the individual coins based on a sample
silver spot price of $30.00:

Pre-1965 half dollar = 0.356 oz silver x $30.00 = $10.68

Pre-1965 quarter = 0.178 oz silver x $30.00 = $5.34

Pre-1965 dime = 0.0712 oz silver x $30.00 = $2.136

Junk Silver coins, comprised of 90% silver, serve as a testament to the steep
USDollar devaluation in the modern
era since the Vietnam War and the
departure from the Bretton Wood Accord
(the Gold Standard). When these coins
were initially minted, they were produced
in such a way as to ensure that any
given fixed US$ face value in any
combination of these coins would contain
the exact same amount of silver and
as such, represent the exact same
value. After all, silver once represented
real money in the United
States, so $1.00
worth of silver dimes had to be worth
the same as $1.00 worth of silver
quarters. The coins have risen
21.36 times their original face value,
over a 95% loss of value. The ratios
are consistent in the debasement.
Those people who cling to the notion
that American homes offset the lost
value of money are sadly mistaken.
A home worth $50 thousand in 1965
is not worth over $1 million today.
Maybe it is worth around $200k to
$250k, give or take. The stock market
used to preserve value. Expect the
same silver coins to rise to 50x original
face value. Sure glad the Jackass
purchased a scad of rough junk silver
coins in 1997 and 1998 when the Silver
price was a mere $7 per ounce. They
are not junk; the USDollar is junk.
The central banks are junk alchemists.

Price is elusive, since obtaining through purchase involves payment of a premium.
Click in matched links for prices
quoted. The more recent coins can
be had with a 10% premium, like $3.50
over silver spot for Washington
quarters (HERE).
Or a $3.40 over spot for Franklin halves (HERE).
Or $4.80 over spot for older Mercury
dimes (HERE).
Or $5.60 over spot for older Walking
Liberty halves (HERE).
The genuine article is the wildly
popular standard Morgan dollar, which
is set at $11.20 over spot (HERE)
since a collector item. All the cited
prices over spot are versus the silver
metal price, the premium paid over
the spot silver price when all coins
are placed on the same footing for
comparison, regardless of face value
like 10 cents or 25 cents or 50 cents
or 100 cents. Thanks to RobH in Washington state for this entire story, and his calculations.

##
RISE OF USDOLLAR ALTERNATIVE

◄$$$ CHINA IS LAYING THE FOUNDATION FOR LAUNCHING A
GOLD-BACKED GLOBAL CURRENCY. FOR THE
CHINESE YUAN CURRENCY TO BECOME GOLD-BACKED,
A TREMENDOUS GOLD RESERVE MUST BE
IN PLACE. BUT FIRST IT MUST BE FULLY CONVERTIBLE IN THE FOREX MARKET.
GLOBAL BANKING SYSTEMS MIGHT SOON
LOSE MOTIVE FOR HOLDING USTBONDS,
AND INSTEAD FAVOR CHINESE YUAN INSTRUMENTS.
$$$

This is not a new story. It has been reported and analyzed in past Hat Trick
Letters. However, it is of utmost
importance. The Petro-Dollar remains
the base foundation for the USDollar
used as global reserve currency. In
order to settle vast trade, starting
with the core of oil sales, global
banking systems in scores of countries
are loaded with USTBonds as reserves
across the entire array of banks.
It appears that the entire system
is in the process of change, without
publicity. The transition goes far
beyond bilateral currency swaps set
up for trade facility in essentially
barter systems. Some important preparations
are being made. China is recasting
all of their gold reserves into small
1-kg bars. China is taking newly shipped gold bars
from Western
Europe and recasting them. An ostensible
motive could be to issue a new gold-backed
Yuan currency, or to support a new
trade settlement system. The disruption
will be far more to the USDollar than
to global trade, as many analysts
have it backwards. Witness a strategic
part of their recent initiative to
sign new trade agreements with Russia, Japan,
Chile,
Brazil, India,
and Iran.
What incredible irony if a large slice
of the raids on Allocated Gold accounts
have resulted in a caravan of gold
shipments to China, especially if later recast. One could regard
the 1-kg form to be an attempt to
remove the evidence of where the gold
origin was located, exploiting its
fungible nature. One could also regard
the 1-kg form to be a loud statement
that the British pound and ounce system
is being scrapped in favor of the
more universally accepted kilogram
system.

The broad gold recast project indicates the Chinese are
preparing for a new system of trade
settlement, supported by a legitimate
currency. They appear to be constructing a foundation for a possible new monetary system
based in gold that supports the trade
payments. One fits into the other,
both calling for the other like a
hand in glove. Initially used for
trade, it will later be used in banking.
The USTBond could soon be kicked aside
from global bank electronic systems.
Regard the Chinese project as preliminary
event to a replacement of the debt-based
US Dollar system. The Chinese are
removing thousands of metric tons
of gold bars from London, New York, and Switzerland. They
are recasting the bars into kilogram
format. The larger Good Delivery bars
are being reduced into 1-kg bars and
stored in China. It is not clear whether the recast project
is being done entirely in China, as some indication has come that Swiss
foundries might be involved. They
have so much experience and capacity.
See the India Vision article (CLICK
HERE),
the Economic Collapse article (CLICK
HERE),
and the Gold Silver World article
(CLICK HERE).

◄$$$ REPORTS SWIRL THAT CHINA IS ATTEMPTING TO ACT
AS INTERMEDIARY IN GLOBAL OIL TRANSACTIONS,
FOR YUAN CURRENCY SETTLEMENT. THE
REBELLION GLOBALLY IS PICKING UP MOMENTUM
AGAINST THE USDOLLAR. THE PETRO-DOLLAR
DEFACTO STANDARD IS SLOWLY UNRAVELING.
THE DENIZENS OF THE UNITED STATES
HAVE NO IDEA THE RAVAGING IMPACT OF
A LOST GLOBAL RESERVE CURRENCY. IT
WILL UNLEASH PRICE INFLATION WHEN
THE USFED CENTRAL BANK IS LETTING
LOOSE THE MONETARY FLOOD GATES. $$$

Crude oil payments are the critical core of global trade. The rest of global
trade will follow in non-USDollar
payments, all in time. Then the USEconomy
will enter the Third
World with a grand thud, with shock
& awe. The US leaders will be
unable to blame Moslems or Chinese
or Rogue Traders or even 12 kids who
could not fly a Cessna airplane. They
might blame the hirsuit Sasquatch
or unruly Vikings, when in reality
the US is up against vengeful Cossacks and the angry
Mongol Horde. No end to the boogeymen
the USGovt clowns create. The Jackass
view is plain. The Fall of the Fourth
Reich is underway, 11 years after
the takeover of the USGovt, which
set into motion the $trillion bond
frauds, and the launch of the endless
narco wars. The full impact of the
Iran sanction work-arounds
is coming to pass, as the world is
integrating its anti-SWIFT mechanisms.
The loser will be the United States and its nazi banker handlers.

Gerald Celente reported last week, "On September the 6th of 2012,
China officially announced that any
country in the world that wishes to
sell crude oil using its currency
the Renminbi instead of the USDollar
can do so. The following day September
the 7th, Russia
announced that the nation will sell
China all the crude oil they need, no limitations
whatsoever. They will not use the
USDollar for their trade. While you
were watching the Democratic Convention
the Dollar died, says Lindsey Williams."
The claim by Celente is far reaching.

What China is offering is an intermediary clearing
house role to sidestep the Petro-Dollar,
where crude oil payments can be made
in the Chinese Yuan currency. This offer is a financial act of
war against the United States currency, where China will backstop all transactions. It is a
violent offer to disrupt the USDollar.
Look to see if any Saudi oil sales
are settled in Yuan currency as alternative.
The superpowers are openly attempting
to isolate the USDollar, the clear
victim to be the USEconomy, the land
of consumption excess. The move is
a tacit push of the US into an isolated place where it can very easily
slide into the Third
World.

The world is on a very dangerous path, a road that leads straight to World War
III. In order to see what is at stake,
one must look at the big picture and
connect the dots. Examine the history
of the USDollar, its relation to oil,
and the real motives behind the wars
of the past two decades. See the YouTube
video (CLICK HERE). A global consultant
source who deals on at least four
continents claims that the world is
already are in the middle of WWIII.
He said, "Trade could and
should be conducted on a peaceful
non-violent basis, all based on quality
and free market competition. The video
clip strings together the hard cold
facts like pearls on a string. If
people do not own and hold physical
metal, then they are royally screwed."

My view is that gradually the gloves are coming off. Russia
& China
are staring into the USGovt eyes,
after seeing economic weakness, financial
insolvency, desperate banker response,
and over-extended military. The two
superpowers are squaring off against
the United States, whom they perceive as vulnerable
and in disarray. The writing is
on the wall, that the USDollar is
dead. The only remaining piece
is the Saudis accepting non-US$ payment
for oil, which would be followed by
the entire set of Persian
Gulf oil producing nations. Then the
Petro-Dollar defacto standard will
be gone, the practical foundation
for the USDollar itself.

The world is left to wonder if China wishes to sell
Russian crude oil as intermediary
also. Or perhaps Russia will sell
crude oil in Yuan terms, facilitated
by a Chinese currency intermediary.
Or perhaps China
will sell refined energy products
from Russian original supply, but
in Yuan terms. The one certainty
is of a USDollar bypass in construction,
with crude oil being sold outside
the USDollar sphere in a Petro-Dollar
undercut. All cited prospective
alternatives would involve non-US$
transactions. This announcement by
China
is one of the most significant sea
changes in the global economic and
monetary systems, but was barely reported
in the United States where the global reserve currency
status is taken for granted. To be
sure, the Democratic convention eclipsed
all, complete with 100 thousand balloons.
The action could very well serve as
the catalyst that brings down the
USDollar as the global reserve currency,
and change the entire dynamics of
how the world purchases energy.

Lindsey Williams concluded, "This has never happened in the history
of crude oil. Since crude oil became
the motivating force behind the entire
USEconomy, everything in our lives
revolves around crude oil. And
since crude oil became the motivating
factor behind our economy, never,
ever has crude oil been sold, bought,
traded, in any country in the world,
without using the American dollar.
Crude oil is the standard currency
of the world. Not the Yen, not
the Pound, not the Dollar. More money
is transferred around the world in
crude oil than in any other product.
On Friday September 7th, Russia announced that as of that day, it will supply
China
with all of the crude oil that they
need, no matter how much they want.
There is no limit. And Russia
will not sell or trade this crude
oil to China using the American dollar." He
made this statement on the Just Measures
Radio network on September 11th ironically.

These actions by the two US superpower adversaries
represent a frontal assault attack
on the Petro-Dollar highway on which
the USDollar reigns supreme. The world
will next begin to bypass the USDollar,
a crowning blow to be the Saudis doing
the same. In the future, no longer
will US
sanctions like against Iran
have a perceptible affect. The
nation all too eager to paint others
as rogue nations will itself become
grossly isolated. The whole world
will be painted as rogue nations,
the painters (USGovt officials) stared
at as lunatic, devious, sinister,
and criminal. Once the majority of
the world begins to shun the USDollar,
then the full weight of USGovt debt
and diminished manufacturing structure
will come crashing down on the American
people and its fast deteriorating
economy. The US
supply chain must then be met with
foreign currency bid up by a falling
wounded USDollar. The price inflation
and acute shortages will pave the
way to the Third World. A major blow has been delivered to the American empire
and to the King Dollar. The pair Russia
& China
are aiming to become the controllers
of energy, and in turn controllers
of a new petro-currency. See the Examiner
article (CLICK HERE).

◄$$$ JAMES GRANT ARGUES THAT THE GOLD STANDARD SHOULD RETURN. HE HAS BEEN
A HARSH CRITIC IN THE MAINSTREAM FINANCIAL
CIRCLES, DOLING OUT INTENSE DIRECTED
CRITICISM AGAINST THE USFED FOR THEIR
FOLLY AND RUINOUS ALCHEMY. THE GOLD
STANDARD WOULD BRING GROWTH AND STABILITY,
REMOVING THE OPPORTUNITY
FOR FRAUD, THEFT, AND COUNTERFEIT
BY THE BANKER ELITE. $$$

Jim Grant calls the Gold Standard a force for growth
and stability in contrast to the heretical
central bank methods, which are best
characterized as unproven and truly
radical experiments.Bear in mind that only the Gold
Standard can replace the current fiat
paper currency regime, which is undergoing
collapse and failure. In no way
can a new and better paper currency
replace the USDollar as global reserve
currency. That is why the clumsy IMF
efforts at a SDR basket all fail,
and the clumsy Dollar Swap Facilities
all fail, and clumsier EuroCB design
of LTRO funds fails. The concept of
Super Bonds flies in the face of this
VonMises Sound Money Corrollary.

As preface, recall Grant's comments describing the stock market distortions,
when he said "I think we live
in a hall of mirrors in finance, thanks
to the zero interest rate regime and
the chronic non-stop interventions."
He saved his most acerbic and directed
criticism for the central bankers.
Grant refers to the USFed as truly
lost, having destroyed the field and
killed the patient. He urges stronger
rules to conduct central bank operations
in order to provide discipline and
protection. He said the following,
an implicit reference to the Soviet
Politburo planning council.

"The
Federal Reserve needs to get out
of the central planning business.
The Fed was organized in 1914 and
opened its doors to conduct a more
or less traditional central banking
business, meaning it would lend against
good collateral to solvent institutions
in times of cyclical or seasonal need.
It would defend and protect the gold
dollar. That was all that its original
remit contained. Fast forward many
decades, and we see the Fed in
the business of steering, guiding,
manipulating the economy, financial
markets, even the yield curve.
It manipulates and pegs interest rates.
It is all over the joint doing what
failed in the old Eastern Bloc [of
Soviet Union]. What we need is a central bank that has the humility
not to do what it cannot do. And the
Fed cannot do what others have failed
to do, namely to plan an economy from
a central desk in the capital city." Hidden in this comment is a reference to what the Jackass has called the Politburo
in the past, a combination of central
bank and congressional board. By the
way, the Russian word 'soviet' means
council. The United States is increasingly ruled by councils
as planning boards, a Soviet structure
with Marxist directives.

The climax comments pertained to reviving the Gold Standard. Grant strongly
prescribes the Gold Standard as the
disciplinary formula to cure what
ails the United States in its financial sector and economic
streets. He does not address the
abdication of power that is required
by bankers in installing the prestigious
Gold Standard. The United States will fall into the Third World due to its rejection of the Gold Standard and & interminable
support of a dying financial structure.
The degradation is well along, a consequence
of the widespread bond fraud, unbridled
hyper monetary inflation, unchecked
welfare state spending, and embraced
endless war complete with shri ll
propaganda.

"Absolutely
[prescribe the Gold Standard]. The
unintended consequences of massive
intervention, and this entails both
0% interest rates and the grotesque
enlargement of the Fed balance sheet,
mostly the risks that the Fed introduces,
these are the risks of the suppression
of the basic laws of Supply and Demand.
The reason that the shelves of Wal-Mart
are full rather than empty is that
freely set prices balance supply and
demand in this very complex thing
called the economy. That is what prices
do. Prices are discovered in the marketplace.
From 100 years before and after the
institution of the classical Gold
Standard, the price level was the
same, as in 100 years the same."

Grant preaches on the extreme benefits and deep-rooted virtue of the Gold Standard.
In summary, it would lead to economic
stability or instability. "The
Gold Standard is a force for growth
and stability. It never can be
confused with heaven on earth. Paul
Krugman ought to consult a book by
Charles Goodhart, one of the great
eminences of big monetary affairs.
He wrote a book about the New York money market in 1900 and 1913, fourteen
years before the institution of the
Fed. Goodhart deemed that period to
be the best period on record for New
York City banking with regard to stability,
solvency, and profits, notwithstanding
the panic of 1907. What is important
is the rules in which these banks
operated. The important rule was the
owners of the bank were responsible
for the solvency. Not the government,
the owners. It was a capitalist enterprise."
Grant rightly considers Paul Krugman
to be a buffoon in an economist clown
suit, to which the Jackass concurs.
His Nobel Economics Prize stands next
to Obama's Nobel Peace Prize as a
travesty. Both prizes were bought
and paid for. See the Zero Hedge article
(CLICK HERE).

##
GOLD STORY MEGAPICTURE

◄$$$ BILL GROSS OF PIMCO LIKES GOLD MORE THAN STOCKS OR BONDS, FINALLY
SEEING THE LIGHT. HE WAS DUPED TWO
YEARS AGO, NOT SEEING THE INTEREST
RATE SWAP MANEUVERS. HE FOCUSED TOO
MUCH ON HONEST DYNAMICS, IGNORING
THE CORRUPTED MARKET. HE HAS FINALLY
REJECTED THE USFED AS A SANCTUARY.
WATCH WHAT TYPE OF GOLD ASSET HE INVESTS
IN. $$$

The Bond King Bill Gross from PIMCO declared in a Bloomberg
interview that Gold is a better investment
than stocks or his specialty, bonds. Wow! Step back and behold an important endorsement by a very respected investor
with vast experience, and past access
to insider information on USTBond
and USAgency Bond information. Regard
the call as perhaps stage #2 of the
massive secular bull market for Gold.
The smart money might be coming to
a great awakening that stock paper
assets are supported by endless USGovt
propping, against a backdrop of constant
high frequency aberrations conducted
by Wall Street. The smart money is
awakening to the fact that sovereign
debt, even if blessed by governments,
does not offer much safety after all.
The smart money must finally realize
that paper assets are under siege
on a global basis, whatever the type,
and that only Gold & Silver offer
true value and strong defense against
runaway monetary inflation and desperate
discredited central banks. While credit
must go to Gross for the epiphany,
he is surely late to the party. He
seems to have missed the Gold price
move from the $300's and $500's, to
register 3-fold and 6-fold gains.
The GATA crowd, the Hat Trick Letter
crowd, the Turdites, the Army of Goldbugs,
the competent rational stable observers
since 2004 have exploited the big
easy gains. Yet more gains are to
come, and his mainstream funds are
welcome. See the Bloomberg article
(CLICK HERE).

Bill Gross probably feels betrayed by the USDept Treasury and USFed. The big
PIMCO bet he made against the USTBonds
in 2010 before the QE travesty began
did not turn out to be successful.
His inside information access before
then had proved valuable, with vast
USGovt mortgage bond purchases. He
invested ahead of them. Gross was
widely criticized for missing the
bond rally that sent bond yields under
2%, but he made some wrong assumptions.
He assumed that heavy USGovt debt
supply would make an impact on bond
yields, incorrectly. He assumed the
USTBond market was run by honest brokers.
He was very wrong. The USTreasury
Bond market is controlled by Interest
Rate Swaps and a maze of derivatives
in a totally delusional artificial
market. He might have inside information
about the USTBond Tower and IRSwap Black Hole, how they
are destined to fall and create the
crater. Gross probably has strong
suspicion that the USDollar system
is imploding, with Gold the last asset
standing alongside Silver. He
must be aware of global developments,
even though he seems never to leave
the US Dome of Perception. He must
observe the important rebellion against
the USDollar, with Iran sanction workarounds,
with Chinese bilateral swap facilities,
and with Russian-Chinese oil deals.
He might be very keen to the USFed
desperation and lack of solutions.
Bill Gross is turning his back on
Chairman Bernanke. Let's watch the
PIMCO fund investments in Gold, and
see if he falls into the GLD Exchange
Traded Fund trap like a gullible rookie
fool.

◄$$$ BILL GROSS OF PIMCO COMPREHENDS THE DISTORTION OF THE ENTIRE FINANCIAL
AND ECONOMIC SYSTEM WITH THE ARTIFICIALLY
LOW 0% RATES. HE COMPREHENDS SLOW
MONEY VELOCITY AND ECONOMIC DISTRESS
AS THE RESULT. THEY ARE NOT STIMULUS.
INSTEAD THEY ARE DESTRUCTIVE. THE
CENTRAL BANK DEVICES ARE NOT WORKING.
THEY ARE FRUSTRATED AT THEIR VISIBLE
FAILURE. $$$

Bill Gross understands a root problem in the entire economy and asset markets,
the 0% official rate that distorts
all. The slow dance reference is the
USEconomy suffering from the dampening
effect during a recession. The overweight
partner is a reference to a fat dancer,
loaded down by heavy debt burden.
He said, "If the dancing has
slowed down, then the reason is not
just an overweight partner. It
is that the price of money (be it
in the form of a real interest rate,
a quality risk spread, or both) is
too low. Our entire finance based
monetary system, led by banks but
typified by insurance companies, investment
management firms, and hedge funds
as well, is based on an acceptable
level of carry and the expectation
of earning it. When credit is priced
such that carry is no longer as profitable
at a customary amount of leverage
and risk, then the system will
stall, list, or perhaps even tip
over."

Gross gives an important warning to the USFed itself,
that the distortion effect and dampening
effect are pervasive and dangerous
from the ongoing 0% rate forever. The central banks have sown the seeds
of the entire financial system's own
destruction. The only remaining issue
is the timing of the collapse. An
entire economy requires credit responsibly
managed and delivered for efficient
operation and prosperity. The desperate
central bankers are stuck at 0%, unable
to find an Exit Strategy despite the
desire and need. This was the 2009
forecast by the Jackass, made boldly
and against the crowd, that the 0%
rate would become a permanent fixture,
with central bankers (in particular
the USFed) unable to raise interest
rates. It was a correct call. They
cannot admit their failure, the billboard
sign being the 0% stuck rate.

The central bankers have forced the individuals and private businesses to ramp
up risk, searching for yield. When
yields are too low, and acceptable
risk spreads so narrow that interest
revenue is increasingly marginalized,
then institutional lending is stunted
and obstructed. High overhead costs
realized in rents, salaries, pension
& health benefits, for instance,
force financial and lending institutions
to do one of two things. They increase
leverage to cover those costs, or
they curtail lending down to preserve
equity and to protect the franchise.
On the other side, the pension funds
must ramp up risk by taking on ill-advised
investments like mortgage bonds. They
were hurt badly in 2007 and 2008.
The paradox of fiat money and credit
systems is coming to light.

Zero bound interest rates according to their historical models should inevitably
and inexorably lead to dynamic real
economic recovery. Central banks are
bewildered in stunned disbelief that
the endless stream of QEs and LTROs
have not produced the desired result.
Structural impediments placed in the
way such as regulatory risk standards
for banks only make the headwinds
stronger. Bond monetization and loans
against toxic bonds just do not have
the magic pixie dust that the economists
learned badly in graduate school.
They should all have their PhD's revoked,
since they cannot detect the capital
destruction consequence from rising
costs. The past dependence upon the
housing market asset bubble for spendable
income has ravaged the nation's banking
system, again a 2006/2007 Jackass
correct forecast. The dispatch of
thousands of factories to Asia
has removed the potential for traction.
It is game over, except for Gold &
Silver investments. Gross sees this
opportunity finally. See the Zero
Hedge article (CLICK HERE).

◄$$$ ROYAL BANK OF SCOTLAND IS OUT OF THE GOLD
GAME. THIS IS PROBABLY NOT A CONSCIOUS
PRO-ACTIVE DECISION. LIKE UNION BANK
OF SWITZERLAND
IN 2011, THEY WERE LIKELY DEPLETED
OF THEIR GOLD IN DIRECT ATTACKS BY
EASTERN ENTITIES. THEY HAVE BEEN GUTTED
AND MUST NEXT SAVE FACE WITH LIES
ABOUT RE-ORGANIZATION. $$$

Royal Bank of Scotland will officially shut
down its gold trading desks. Curiously,
two months after 5000 metric tons
of gold bullion was reported forfeited
by London and New York banks, shipped
to points East under the duress of
off-market trades with heavy margin
call pressures, the RBS gold team
folds its tent. The bank will also
halt commodities research. The firm
offered no further details, because
it would be too embarrassing. Either
they suffered dire consequences of
big leveraged trades gone bad, or
they were caught illegally using Allocated
Gold in accounts as margin collateral
and had to forfeit their own bank
reserve gold in private treasury.
My belief is both factors are at work.
RBS is 82% owned by the UKGovt, which
bought an empty bag next to a black
hole. The bank is saddled with pre-tax
losses and pending investigations
related to LIBOR price rigging. See
the UK Reuters article (CLICK HERE).

◄$$$ PUT 40 THOUSAND TONS INTO PERSPECTIVE. THAT IS THE MINIMUM VOLUME
OF GOLD BULLION ILLEGALLY IMPROPERLY
ACCESSED GOLD BARS FROM ALLOCATED
GOLD ACCOUNTS OVER A FEW DECADES TIME.
SOME PEOPLE QUESTION THE VALIDITY
OF THE NUMBER. IT IS REAL AND WILL
BE BORNE OUT. THE BANK CARTEL HAS
A PROBLEM RESOLVED ONLY IN NEW REPLACEMENT
DEMAND TO SEND THE GOLD PRICE PAST
$10,000 PER OZ, OR TO FACE JAIL TIME
(OR WORSE, HIT SQUADS). $$$

Some basic data. The lower figure of 40,000 metric tons turns out to be 1.28
billion ounces or a value of $2.1
trillion at an average price of $1600
per ounce. The total volume of gold
mined up to year 2005 was 4.25 billion
ounces, according to research by David
Zurbuchen. Then add an additional
500 million ounces of gold mined since,
to arrive at roughly 5 billion ounces.
The amount is approximately 150,000
metric tons. Furthermore, the annual
global demand is 84.3 tons for jewelry,
while technology uses 33.0 tons, according
to the World Gold Council at end 2011.
On its face, the 40 thousand metric
ton figure for ransacked gold seems
staggering enormous huge. Such arguments
are not impressive, nor complete.
The argument seems far too rational
against the 40k ton figure. To be
sure, official gold held in known
sources does not properly account
Chinese, Russian, or Vatican hidden sources. Worse,
it counts the USGovt hoard in Fort Knox which has been depleted by theft
and Wall Street carry trade.

The conclusion given to me by The Voice (experienced savvy gold trader) is that
the majority of vaulted gold has been
grabbed, seized, sold into the market,
and replaced by dodgy gold paper certificates.
The owners are in revolt, demanding
their gold and seeking justice. The
majority of all secured Gold has been
improperly used by the banker cartel,
which has been finally cornered.
It is almost amusing to defend the
point and the 40k ton volume. Most
gold events never make the news. The
Qaddafi 144 tons of gold remain in
London, a motive
for war in Libya
to depose the dictator and to steal
his gold. Not in the news. The Swiss
bankers are caught in a class action
lawsuit with several $billion at stake
in claims. The Swiss banking system
is a wreck. Not in the news either.
The US Fort Knox contains a large
nerve gas depository, not gold bullion.
Not in the news either. The Russians
and Chinese are buying perhaps 10
times as much gold as they report
to the official agencies supposedly
given authority to monitor. Not in
the news either. The southern region
of Africa, centered in Congo, is the site of high
pitched battles over gold in transport,
in the largest smuggling projects
in modern history. Not in the news
either. No, much of the global gold
is not visible in the light. It is
owned by powerful entities, often
hidden from the US
and London centers. Much of it has been improperly
used by the Wester bank cartel. They
are on the defensive and will be fortunate
to escape with their lives.

It seems the logical conclusion is that the news networks
do not report much of any important
news, having reverted to useful propaganda
devices. So reliance upon news data to dispute the 40k ton illegal usage of gold, it
just seems baseless and frivolous
if not spotty and shallow. The Jackass
will stick with The Voice as a great
source of information, whose perception
(not really a forecast) requires a
few months for confirmed verification.
He sees the gold in movement, the
violated contracts, the scurrying
to repair the damage, and knows many
of the aggrieved clients. He has not
been wrong about any gold story, only
once made an error in timing. Having
stopped giving timing calls, he has
not been wrong any more. Smart guy.
The Jackass similarly has avoided
most forecast errors by no longer
making any TNX bond yield forecasts
on the long-term USTreasurys.

◄$$$ MAJOR WARNING WINDS ARE TOTAL OPPOSITE TO THE 1980 ERA. THE COMPARISON
TO 1980 IS ABSURD ON TEN FACES. THE
BIGGEST NEW FACTORS ARE THE ARRIVAL
OF CHINA, THE ADVENT OF INTERNET, AND THE BROKEN
MONETARY SYSTEM. BACK THEN IT WAS
A TREND EASILY INTERFERED WITH. NOWADAYS
IT IS A MATURE GLOBAL RATTLING TREND
THAT WILL UNSEAT THE USDOLLAR AND
REBUILD THE GOLD STANDARD ON A TRADE
PLATFORM. $$$

The current disaster is not unfolding in any manner similar to 1980. Obviously
it is not unfolding like 30 years
ago in the Gold market. Back then,
the Hunt Brothers tried in mindless
idiotic ways to corner the paper silver
market. They were overturned by mere
rule changes. What morons! The current
Gold market nowadays suffers from
shortage of physical gold, improperly
used vaulted gold, declining global
mine output, monumental currency debasement,
unspeakable government deficits, insolvent
banking systems, outsized banker welfare
in grants, and overused derivative
devices to produce artificial bond
demand during a time when foreign
creditors have waged their own hidden
wars against the USS Dollar ship of
state, whose helm is occupied by a
crime syndicate melded with a war
machine. The age old nemesis to
Gold is the USTreasury Bond, which
suffers exposure of being propped
by leveraged derivatives. The
syndicate controls the big US banks,
the US military establishment,
the narco wars that redirect funds
back to the giant banks. It also controls
the big Pharma with their mysterious
deadly vaccines, and the US
news networks with their incessant
propaganda. Thirty years ago, none
of these major factors were in play.
So the parallel argument is ignorant
and vacant.

Today's events are more like the antithesis of 1980 events
played out again. Some call the 1980
era the Kondratieff Autumn, and today
the Kondratieff Winter, which makes
more sense. Over 30 years ago, there was no industrial
China, no internet, no PCs or mobile
devices, no computer networks, no
debt saturation, no lost US factories,
no weakened unions, no pensions dying
on vine from 0% starvation, no hedge
funds, no great age of speculation,
no flash trading in stocks, no Exchange
Traded Funds, no discarded industrial
base, no nazi war machine. The
current situation is the precise opposite
of 1980, and comparisons in my view
are laughable, which expose a deep
grotesque ignorance in the investment
community and analytic brain trust.
In the current situation, the corrupted
paper Gold market operators have been
cornered like rats with basement lights
shined on them. By contrast, the physical
Gold market is enjoying a renaissance
in China and India with outsized demand. The physical Gold
device is being used by Iran, never seen in the 1980 era. The majority
of the US population falls victim
once more to basic propaganda about
Gold, repeated a second time in the
same shrill frequency. Also the global
population is 50% higher now than
in 1980, a shocking factoid. That
means a lot more Gold buyers and investors.

The Gold price responds to the shell games perpetrated ad nauseum in the paper
Gold market. A grand gold market
divergence is to become extremely
clear, as the paper Gold price remains
perhaps in a controlled upward movement,
while the physical Gold market zooms
with great breathtaking leaps upwards.
Demand from numerous corners has come.
A client informs that the jet set
in Aspen Colorado is buying physical Gold hand over
fist, under counsel from financial
advisors. My reasoning is that if
the resort crowd in the mountains
is part of renewed ample Gold demand,
then so is the constellation of Hollywood
movie stars. One would not be wrong
to conclude that wealthy corporate
leaders are also buying physical Gold.
Nobody trusts the big banks. After
three full years of 0% and piddly
CD offerings and deep losses in mortgage
bonds from corruption and recent losses
from European sovereign bonds, the
wealthy are moving down the risk ladder
and discovering physical Gold. The
Exeter Gold pyramid makes more sense
than at any time since 1971.

◄$$$ ULTRA-WEALTHY SOVEREIGNS ARE ACQUIRING GOLD DIRECTLY FROM MINERS,
BYPASSING THE MIDDLEMEN AGENTS IN
LONDON. THIS FACTOR EXPLAINS LOWER MINE OUTPUT
DATA, YET GOOD REVENUE DATA. THE CORRUPTION
OF THE GOLD MARKET HAS LED TO THE
DIRECT STEPS. THE COMEX SHOULD BECOME
AN EMPTY LOT BEFORE TOO MANY MORE MONTHS. $$$

The Slog blog is a reliable insider in the United
Kingdom. He wrote
recently, "Off the radar,
it already has. I posted towards the
end of last year about how lots of
Gold trade middlemen are being cut
out by wealthy investment combines
and Arabian & Asian Sovereigns
and their advisers, who are approaching
the miners directly. They offer the
producers mouth watering deals: have
the cash now, set aside the Gold for
us in perhaps six months time. They
can hold the money interest free.
Just sign here saying whatever might
come, you will give us the Gold. Or
at this guaranteed futures price way
above the current level, we sign here
to say we will buy whatever you can
produce." Wow! A bypass of
COMEX, sure to be left dry. The middlemen
are being cut out. His speculation
is that the same practice has begun
to happen in Silver. It matters little
whether the impact is felt on investors
or industrial users. The bypass is
done by the Sprott Funds for Gold
& Silver also, sourced directly
from the mining firms, and probably
taken with a premium offered. The
effect is to push the price divergence
between the corrupt paper Gold market
and the honest physical Gold market.
This is a Jackass forecast, of a powerful
price divergence.

The Slog further suggests that impaired production figures currently being released
might be distorted due to these deals
made under the radar. It is well known
that ore grades are falling. The financial
sector maven manipulators are extremely
vulnerable to removal of large volumes
of six months forward supply from
any miner. If quietly sold ahead,
it is thus made unavailable to meet
present demand that grows markedly
in the COMEX market. The corrupt COMEX
market will become a vacant lot, occupied
more by lawsuit papers than metal.
See the Word Press article (CLICK
HERE).

◄$$$ JEFFREY CHRISTIAN HAS LOST ANY SHRED OF CREDIBILITY. HIS STANDARD
FARE OF PROPAGANDA, NADLER TOO AT
KITCO, MAKE GOOD COMEDY. THEY ARE
CONSISTENT IF NOTHING ELSE. REGARD
THEM AS CONTRARY INDICATORS FOR PRECIOUS
METAL PRICES. $$$

Jeff Christian suffered a weak moment and spouted truth in 2010, at his March
testimony before the US Commodity
Futures Trading Commission. At that
time, he made headlines when he revealed
that the so-called physical Gold &
Silver markets in London are mainly just paper shorting operations.
See the GATA article (CLICK HERE). Otherwise, he is a designed Wall
Street gold harlot with no shame,
an obnoxious mouthpiece. The other
Bobsy twin has been Jon Nadler, who strangely is permitted to pollute
the Kitco web journal with his endless
wrong chatter that passes for analysis.
Once in 2009, when the Kitco editors
yanked a Jackass article for its virulent
content, the editor was directly asked
why the yank and why the free rein
for idiots like Nadler. The response
was so honest as to be surprising.
The message came back that Nadler
is a good friend of the Kitco board.
A ripe response was given back that
focused on journal integrity.

In early September he reverted to form. On the Business News Network in Canada,
Christian pronounced that the US Federal
Reserve would announce no substantial
bond monetization, that the USFed
inaction would smash commodity prices,
and that CPM Group had advised its
clients to go short gold and silver.
See the BNN video clip (CLICK HERE). Those among the CPM Group clientele
who heeded such sage advice here,
or for that matter over the last decade,
have taken huge losses in the shorts.
Like the CNBC hack tools in the United States, BNN is a hack tool in Canada. They have banned GATA
representatives from interviews on
the network. Regard appearances on
BNN by the grand cross-eyed oracle
Christian as extreme bullish signals
for the Gold & Silver prices.
Jeff Christian and Jon Nadler are
whores who make fat street hookers
look cute and appealing.

◄$$$ MORE TUNGSTEN SALTED BULLION BARS WERE SPOTTED, THIS TIME IN MANHATTAN.
THE FAITH IN GOLD BARS STAMPED WITH
REPUTABLE REFINERY SEALS WORKS TO
UNDERMINE FAITH IN THE ENTIRE BANKING
SYSTEM RUN BY THE ELITE. THE FINGER
OF BLAME IS POINTED AT THE SWISS GOLD
BANKERS THIS TIME. $$$

The Syndicate has been busy to counterfeit and produce fake bars of a barbarous
relic they do not respect. An easy
explanation can be given. The Syndicate
is accumulating the gold bars in mountains
in massive volume, while they pour
out propaganda to the public to show
disdain for gold. My claim for two
full years has been that the Swiss
banking system is broken, that the
Swiss bankers have been raiding Allocated
Gold accounts, and they are part of
a vast criminal Syndicate. The bar
spotted was a 10-oz gold bar with
a 999.9 grade, bearing the stamp of
the reputable Swiss Produits Artistiques
Metaux Precieux (PAMP) and a serial
number (#038892). Tyler Durden suspects
the bar has been re-hypothecated in
at least 10 gold ETFunds across the
world. His joking words should not
be quickly dismissed. Gold bars in
Allocated Accounts in Switzerland
are missing, and multi-$billion lawsuits
are in progress.

The salted gold bar mysteriously cropped up in the heart of the world's jewelry
district located on 47th Street in Manhattan. The bar in question that cost nearly $18,000 turned out
to be a counterfeit. The discovery
was made by the dealer Ibrahim Fadl,
who bought the PAMP bar from a merchant
with known past integrity. As a new
practice, he tested a few of his gold
bars worth $100,000 with holes, and
saw gray tungsten, not gold. The bar
was filled with tungsten covered by
a thin layer of gold. The link below
shows various angles of the fake bar,
which reveal how the majority of the
metal is tungsten, with a thin gold
outer layer. The tungsten bears the
same density as gold, the perfect
substitute by criminal organizations
like those in the Swiss banking sy
stem. See the Zero Hedge article (CLICK
HERE).
The tungsten can be detected without
invasive drilled holes by mass spectrograph
methods.

##
GOLD STORY PHYSICAL

◄$$$ BITCOIN WAS HACKED AND LOOTED. THE DIGITAL CURRENCY SUBSTITUTE HAD
BEEN GAINING WITH WIDER ACCEPTANCE.
THE FINGER OF BLAME IS DIRECTED AT
USGOVT SECURITY AGENCIES, WHO ARE
ON A BIG ROLL WITH HACKING PROJECTS
IN BANKING SYSTEMS. THE UPCOMING BANKING
SYSTEM FAILURES MIGHT RESULT MORE
FROM SECURITY AGENCY HACKING AND VIRUSES
THAN INSOLVENCY. $$$

Hackers made off with $250,000 worth of Bitcoins from the Bitfloor currency
exchange, leaving the site empty with
its reserves tapped. Users are wondering
how to be reimbursed for their money.
The Bitcoin heist left the virtual
currency exchange safe empty. The
new online currency Bitcoin has always
been proud of its lack of government
oversight. That touted feature seems
more like an invitation for attack,
given that Bitfloor, the currency-trading
environment for Bitcoin, has been
robbed. Bitfloor founder Roman
Shtylman posted an open letter on
the Bitcoin forums admitting, "Last
night, a few of our servers were compromised.
As a result, the attacker gained accesses
to an unencrypted backup of the wallet
keys. This attack took the vast majority
of the coins Bitfloor was holding
on hand." A later update
stated that the hackers transferred
24,000 Bitcoins valued around $250
thousand to an unknown location, clearing
out all of Bitfloor's virtual cash
reserves. One must wonder why the
private virtual cash was left without
the basic rudimentary protection of
encryption for the wallet keys. What
a serious blunder! See the Digital
Trends article (CLICK HERE).

Steve Quayle's source named simply V has been on the campaign trail talking
about financial false flags with USGovt
intelligence agency agents looting
bank accounts on a massive scale across
the nation through hacking, even more
so overseas. The entire Arab world
is a playground with CIA thefts of
bank accounts, causing havoc in foreign
banking systems. The scoop is that
the Langley wunderkind are testing
a bank Stuxnet system for possible
usage inside the US banking system,
when they wish to shut it down and
enjoy the fruits of account thefts
under the cover of bank holiday. After
the online hacking thefts, they later
blame on whomever they wish, since
they also control the news media networks.
Hitting Bitcoin bears all the indication
of a false flag operation by the Langley pros. The USGovt authorities want to stamp out all digital
currency. In numerous past cases,
the absurd rational has been the tiresome
wornout basis that bad people will
use the currency device to conduct
terrorist activity. How silly! The
US Constitution calls for Gold &
Silver to be used to settle transactions
and debts, public and private. That
is what Bitcoin is based upon. The
US Senate cited without any basis
of proof that Bitcoin is used in drug
trafficking sales. See the CNet article
(CLICK HERE).

The Bitcoin used as a peer-to-peer digital currency, and appears to be respected.
The company describes itself (CLICK
HERE)
as an experimental new digital currency
that enables instant payments to anyone,
anywhere in the world. Bitcoin uses
peer-to-peer technology to operate
with no central authority. Managing
transactions and issuing money are
carried out collectively by the network.
Bitcoin is the name of the open source
software which enables the use of
this currency. In some limited respects
it appears to have been used as an
alternative currency. The trend has
extended to Europeans, who also are
turning to Bitcoin. In the last 18
months, a Bitcoin unit went from being
worth $15 to $3, then to a few cents,
back to $10 value in recent days.
See the Business Insider article (CLICK
HERE).

It seems like the theft was a project taken on as sport more than necessity.
The USGovt intelligence agencies launder
hundreds of $billions of illegal drug
profits every year through international
banks, protected by total immunity
and complete impunity. The $100 bill
is used by the Langley Boyz in narco
containers to store several hundred
$100 million per container in Greek
ports, according to my Central European
banker source. Reportedly certain
Greek ports have numerous such containers
under guard as a cash hoard. Therefore
by consistently applied USGovt logic,
the $100 bill should be outlawed.
Also, the Langley Boyz stole the templates
for the Franklin $100 Bill back in
2005, well documented with some measure
of proof coming from cotton fiber
analysis of paper, after capture of
some very high quality bills. Many
more templates remained at large for
usage. One could conclude the USDollar
should be outlawed before it destroys
wealth, savings, and freedom for all
Americans and our way of life.

◄$$$ THE USGOVT STOLE PRIVATELY HELD
ST-GAUDEN GOLD COINS WORTH $80 MILLION
IN A PURE RAMROD OF JUSTICE. THE LANGBORD
FAMILY LOST A LAWSUIT IN A BATTLE
OVER THE RARE GOLD COINS. THE HOARD
BELONGS TO UNCLE SAM. MORE FASCISM
AT WORK WITH SECONDARY MOTIVE TO SQUELCH
INTEREST IN GOLD. THE CAGEY SWITT
TRIED TO HIDE THE COINS FROM THE ROOSEVELT
CONFISCATION PROGRAM, BUT HIS DAUGHTER
WAS A TRUSTING DIMWIT. $$$

Their stupidity was handing the rare coins to the Philadelphia Mint for authentication.
The Switt family should have validated
their quality using private honest
independent brokers outside the United
States where
private property is respected.
An incredible gaffe, not the least
bit second guessing. Dumb move! The
family of Philadelphia
coin dealer Israel Switt hoped to
celebrate the $80 million fortune
they discovered when they drilled
open a safety deposit box owned by
their father. They uncovered 10 rare
gold coins, St Gaudens double eagles.
The 1933 dated coins are one of the
most prized rarities in history, one
of which was owned by King Farouk
of Egypt
and ultimately fetched some $7.5 million
at a Sotheby's auction in 2002. Switt's
daughter Joan Langbord handed over
the coins to the Philadelphia Mint
for authentification. She must not
be aware that a crime Syndicate controls
the USGovt. They were immediately
seized by the USGovt without any compensation
for the family. According to CoinWorld.com,
"The Langbords asserted in
the motion that the government's evidence
was insufficient on two main issues.
First, that there was not enough evidence
to prove that the coins were stolen
by Israel (Izzy) Switt, Joan Langbord's father, with
criminal intent. Second, that the
government failed to prove that the
coins were the proceeds of a crime
as required by statute."

In July of last year, a federal jury determined that the coins were forfeited
to the government, a ruling that US
District Judge Legrome Davis Jr refused
to overturn in an appeal. "This
is a case that raises many novel legal
questions, including the limits on
the government's power to confiscate
property," the Langbord attorney
Barry Berke said. A walk down memory
lane exposes the motive for Switt
to hide the coins almost 80 years
ago. In 1933, President Franklin Roosevelt
ordered the banks to abandon the Gold
Standard, as the USGovt confiscated
all gold in a gross violation of the
Constitution and a flagrant trampling
of property rights. Excesses on debt
and leverage by the financial sector
were thus followed by illegal confiscations
of gold, in order to resuscitate the
banking industry. See the Huffington
Post article (CLICK HERE).
The history of USGovt abuse of money
is abysmal. The story of the gold
booty from the Spanish shipwreck reported
this past summer was very similar,
using twisted arguments for the seizures
by the government, in violation of
maritime law.

◄$$$ THE SOUTH AFRICAN MINING FIRM GOLDFIELDS IS FROZEN SOLID FROM A WORKER
STRIKE TURNED VIOLENT AND NASTY. IT
IS THE NATION'S SECOND LARGEST MINING
COMPANY. THE STRIKES ARE SPREADING,
EVEN AS THE VIOLENCE IS FANNING ACROSS
THE NATION, ONCE A LEADER IN GOLD
MINE OUTPUT. NO MORE, NOT AFTER THE
NITWIT MARXISTS TOOK CONTROL OF THE
NATION AND DISORDER STRUCK. THE LEADER
OF THE MINING WORKERS IS PITTED AS
RIVAL AGAINST THE PRESIDENT. $$$

No end is seen in sight for striking miners at South
Africa's second
largest gold mining company. The labor
strike has demands for higher salaries.
Negotiations between KDC West miners
and the company were taking place
in Westonaria. The union leaders were
subjected to nasty curses when they
tried to persuade thousands of striking
workers to discuss issues openly.
Communication to the crowd was actually
done at one point from the loudspeakers
mounted on the mining company's armored
security vehicles. Some clumsy comments
came at a Denver Gold Forum in Colorado
where CEO Nick Holland told the audience
that gold miners do not really make
that much money, in his words. He
accuses the industry of digging its
own grave by not fully disclosing
the real cost story. Mining in
South Africa accounts for
6% of the its Gross Domestic Product.
However, in recent years and especially
in recent months, the sector is becoming
a symbol of the economic, social,
and political differences that continue
to polarize the country. See the Mining
article (CLICK HERE).

Thousands of workers are on strike at the Marikana mine owned by Lonmin, as
they plan to defy an extended deadline
to return to work. Worker solidarity
includes families, very vocal in the
demonstrations. An effort supported
by the South African Govt to negotiate
a deal between management, unions,
and miners has so far failed. The
Lonmin wildcat strike is protracted,
having turned to violence. The body
of a man slashed to death with a machete
was found last week at the Lonmin
platinum mine in Marikana, located
in the NorthWest province. In all
to date, a total of 44 lives have
been lost, according to AFP reports.
The scene is macabre, as miners show
hostility to the management while
ignoring the dead body lying nearby.
See the Mining article (CLICK HERE).

Protests have spread to more South African mines. Strikes for higher pay have rattled the platinum firm Amplats, as the violent
strikes are slowly turning into a
nationwide revolt. Over one thousand
protesting South African miners have
blocked access to Amplats mine shafts.
Amplats said it had halted work at
its four Rustenburg mines, which account
for 17% of its output, due to fears
for the safety of its 19,000 staff
stationed there. An estimated 8000
striking miners and their followers,
followed by police in armored cars
and helicopters, conducted a march
to a hospital to see some of the 190
miners whom say claim were beaten
and tortured in police custody. Amplats
is the world's leading platinum producer,
located in the same region as the
Lonmin plant. Analysts expect the
Amplat mine projects to be targeted
as restructuring candidates by parent
company Anglo American. Al Jazeera's
Tania Page reports that workers are
demanding a pay raise to 12,500 Rand,
equal to about $1500 per year. The
protests in Marikana, 100km north
of Johannesburg,
were inspiring protests to spread
further. Workers at the Beatrix gold
mine run by Gold Fields located close
to Johannesburg, were due to join
the strike later last week, claims
the National Union of Mineworkers
(NUM). At Impala Platinum, workers
are demanding a further 10% pay hike
after they received a similar increase
about a month ago. See the Al Jazeera
article (CLICK HERE).

The worker strikes have intertwined with national politics. The worker leader
Malema has urged a worker revolution,
calling for rendering the mines ungovernable.
He accused the NUM union of being
aligned with the country's political
elite. His angry rhetoric has inflamed
the workers. He claims the companies
are making $billions from the nation's
mines. Malema was expelled earlier
this year by the ruling ANC party
for bad discipline. He has since been
a vocal critic of President Jacob
Zuma, who belongs to the ANC. Once
a staunch supporter of Zuma before
a falling out, Malema has stated he
wants to see the head of state removed
from the ANC leadership at upcoming
party elections in December. The winner
of the vote will automatically become
the ANC candidate for the 2014 presidential
elections and likely be South
Africa's next
president.

South Africa is turning into a total clusterfark.
The mess started with the Marxist
nitwit clowns taking over several
years ago. The big clue of snafu was
the electrical grid ruination in 2007
from mismanagement. They followed
up their collosal blunder with a tax
hike on the mining firms, a second
blunder. The blame in my view for
the current mess is the global effect
from the USFed bond monetization,
which has led to rising food and energy
costs worldwide. The Arab spring has
a similar revolt movement in both
South
Africa and South
America, where the poor mine workers
have reacted vehemently. By the way,
some trivia. The word Rand
means ridge in Afrikaner, the mountain
ridges being the site of some of the
richest gold mines in the world, tapped
for four deca des.

◄$$$ TRANSPARENT HOLDINGS OF PRECIOUS METALS IN ACCOUNTABLE LOCATIONS
ARE ON THE FAST RISE. NEW RECORDS
ARE RECORDED EACH DAY. THE PHYSICAL
ACCUMULATION HAS CONTINUED ALL THROUGH
THE CONSOLIDATION OF 2011 TO 2012.
THE COMEX ANTICS REDUCE THE PRICE,
WHICH THE INVESTORS EXPLOIT IN ADDITIONS
TO HOLDINGS. $$$

◄$$$ CHINESE & JAPANESE DEMAND FOR SILVER IS GROWING EXTREMELY RAPIDLY.
THEY LEAD THE WORLD. THE DATA IS MIND-BOGGLING.
THE JAPANESE GOVT SUBSIDIES FOR SOLAR
POWER WILL GENERATE HUGE NEW SILVER
DEMAND. IN EIGHT YEARS, CHINA TRANSFORMED FROM A MAJOR SILVER EXPORTER
TO A MAJOR SILVER IMPORTER. EXPECT
THE SAME IN JAPAN AS IMPACT FROM THE
SOLAR ELECTRICITY INITIATIVE. $$$

Demand for silver bullion within Japan is set to rise significantly.
Japanese Govt subsidies to utility
companies producing solar energy will
be triple the conventional electricity
rate. The effect on their domestic
demand will be enormous, since Japan does nothing in a small way. The generous
tariff will generate an estimated
$9.6 billion in new solar investments
in Japan.
Solar power equipment and solar
panels are fabricated using a significant
amount of silver bullion. Since
the tariff is almost twice what Germany offers, it is possible that Japan will jump to second in the world when it
comes to solar investments, only behind
China. The demand for silver bullion within Japan
will rise significantly in their marketplace,
as companies build out solar infrastructure
and manufacture solar panels, taking
advantage of the tariff. This impact
is very easy to foresee.

Consider the Chinese example for an enormous silver demand
impact. Only eight years ago, China was mining silver bullion
and exporting it worldwide. At that
time, China exported roughly 200
million ounces per year of the precious
metal. Since then, China's demand for silver
bullion has increased by 400 million
ounces, which represents 40% of the
world's total annual silver production.
Today, China has halted all silver
exports, and soon will transform into
a net silver importer to the tune
of roughly 200 million ounces annually.
In just eight short years, the net
export has transformed into a net
import of equal volume. This dramatic
shift in demand for silver bullion
in part reflects the fact that China is the largest producer
of solar panels in the world. China has also instituted a policy to use solar
energy throughout the country, which
further increases the demand for the
precious metal. Expect the Japanese
demand to rise just like it did in
China. The impact on the silver
price is to be obvious. See the Penny
Stock Detectives article (CLICK HERE).

◄$$$ CASH FOR GOLD OUTLETS IN ITALY
ARE BUSTLING, AS THE PEOPLE STRUGGLE
TO SURVIVE. THE MELTED JEWELRY AND
TEETH MAKE BULLION BARS SHIPPED TO
SWITZERLAND.
MANY END UP IN CHINA.
WITNESS A PERVERSE NEW ITALIAN EXPORT,
BUT IT COMPRISES CAPITAL OUTFLOW.
$$$

Italy is seeing a strange run on capital,
effectively a capital flight. Spanning
across the Italian cities and towns
are 28,000 outlets marked Cash For
Gold on signs. Buying gold off desperate
people has become one of the new boom
industries. The people of Italy
have joined those of Portugal
in being forced to sell its gold in
order to eat, or make ends meet at
the month end. Expect no less when
the nation allowed Goldman Sachs to
impose technocrat dictator Mario Monti
as political leader without elections.
Regard the practice as a kinder
gentler nazi extraction of citizen
teeth via plunder in a voluntary program.
The Italians used to be a loud angry
lot, but seem tame compared to Greece
and Spain. Ivana Ciabatti represents
goldsmiths and silversmiths at the
lobby group Confindustria. She said,
"Since I was a child, I remember
that gold was given as a gift on various
occasions for putting it aside. We
used to laugh at it, but they turned
out to be right. Many families are
surviving thanks to this gold."

The individual accounts are touching. Valerio Novelli, a ticket inspector for
the Roman bus system, is planning
to sell his old gold teeth to avoid
running up debts. He must support
an ex-wife and daughter. The people
are barely surviving based on the
gold passed down from generation to
generation, yet the American mainstream
media continues to mock gold constantly.
The Americans will not have it next
year to shore up survival means. The
aggregate data is alarming. The pawnbrokers
that accept the supply can hardly
keep up with business. They typically
have the gold quickly melted down
and sent abroad, making it one of
Italy's fastest growing exports.
Official gold sales to Switzerland leaped 65% last year to 120 tons,
up from 73 tons in 2010 and 64 tons
in 2009. Think of it as wealth
exported, a capital outflow. It is
the blood of the nation being slowly
drained. Thanks to Mike Krieger of
Liberty Blitzkrieg blog. See the Zero
Hedge article (CLICK HERE).

◄$$$ GOLD SMUGGLERS IN THE PHILIPPINES HAVE LOOTED GOLD
MINE OUTPUT. THE GOLD OUTPUT BYPASSES
THE OFFICIAL CHANNELS. THE REPORTED
63% DECLINE IN THE NATION'S GOLD OUTPUT
IS DECEPTIVE. IT GOES INTO BLACK MARKET
HANDS, THEN TO MARKET. $$$

Philippine authorities claim that smuggling activities
account for the 63% decline in their
gold production in the first half
of 2012. Gold smugglers grabbed most of Philippines mine output. The
Philippines
as a nation is ranked #18 as a gold
producer. Officials offered data.
The Dept of Environment & Natural
Resources reported a gold production
decline to 8382 kilograms, due largely
to the 95% reduction in gold sold
to the Bangko Sentral ng Pilipinas
(BSP) in the first 6 months of the
year. Due to the continuing high price
of gold and the increasing number
of small scale mining areas, the decrease
in gold purchases by the BSP clearly
indicates that gold output is going
to the black market and smuggling
activities, according to the agency.
The armada of smaller gold miners
want to take advantage of the higher
price of gold in the international
market. Apparently the BSP offers
a lesser price, and sales to the BSP
are subject to taxes.

The small scale gold mines, accounting for over two thirds of the Philippine
total output, are the main source
of replenishing the central bank gold
reserves. Their level hit a record
high of $10.4 billion early this year.
By taxing profits, the government
is encouraging the bypass. Most of
the small mine output illegally exits
the country, seeking alternative routes
to the market out of view. Hence the
Philippine central bank is losing
its cheapest source of gold reserves.
The national gold data is impressive.
Using 2011 world market prices, the
Philippine gold reserves amount to
76% of their Gross Domestic Product
(GDP) in 2011, the economy size valued
at 9.73 trillion Pesos (=US$233 bn).
See the Bullion
Street article (CLICK HERE).

##
GOLD PRICE READY TO SURGE

◄$$$ LONDON TRADER ENTERED SILVER WHEN IT REACHED THE $30/OZ MARK, AS FORETOLD.
HE IS A BIG PLAYER, WITH A FOLLOWING.
$$$

The LeMetropole Cafe has a diligent observer who goes by the name of Stalker.
He reported in early September that
the famed London trader enter into
silver trades in heavy volume, just
like he said he would if the price
broke $30/oz to the upside. His buy
entry was around the $30.50 point.
It is known that he has no plans to
sell anytime soon. He is still very
long gold, and still loves palladium.

Dave in Denver added his perspective. The Jackass has had respect for his views
since 2005. He wrote, "The
gold & silver story is starting
to seep into the masses. It will happen
slowly. If just 5% of the masses start
to buy real gold and silver, then
eschew the fraudulent ETFunds, there
will be a serious price explosion.
Imagine what will happen if 15 to
20% of the public start buying. It
will be interesting to watch the gold/silver
ratio, because as both metals get
more expensive, there will be a serious
display of the economic law of income
and substitution effect. We will see
the 'Silver is poor man Gold' axiom
on display in a major way."

◄$$$ WYNTER BENTON CLAIMS SILVER IS HEADING PAST $50/OZ BY YEAR END. THE EX-JPMORGAN
CLAN MIGHT KNOW PLENTY ABOUT HOW THE
MONSTER WORKS IN THE SILVER MARKET.
THEY ARE MOTIVATED TO INFLICT GREAT
HARM ON THEIR FORMER FIRM. THEY PAINT
A PICTURE THAT DESCRIBES A MOTIVE
FOR THE MFGLOBAL CRIME SCENE. THE
EX-JPM CLAN WAS PREPARED TO WRECK
THE OLD BOSS AT JPMORGAN AND TAKE
A HUGE DELIVERY IN SILVER. INSTEAD,
JPM SUNK MFGLOBAL AND STOLE THEIR
ENTIRE ACCOUNTS. $$$

The Silver Doctor has a continuing story line from a Wynter Benton, the anonymous
blogger on JPM weblog on Yahoo Finance.
He claims to represent a group of
former JPMorgan commodities traders
under Blythe Masters. Silver Doc tells
how he accurately forecast numerous
silver moves in early 2011. He re-emerged
suddenly in early September after
an 11-month hiatus. He offered an
intriguing perspective on the MFGlobal
criminal assault and rifled thefts
of private accounts, a story that
has some credibility. Benton claims
the October 31st take-down in 2011
of MF Global was specifically designed
to prevent the group of former JPM
traders from taking delivery of a
massive amount of physical silver
and breaking JPMorgan's big naked
short silver position. The story
sounds credible. The old JPM group
knew too much about JPM, and bore
a deep grudge and against their old
boss Blythe Masters. Benton
also claims that JPMorgan's $36
critical price level in silver derivatives
is still in effect. He calls it
a time bomb, one that JPM cannot permit
to be exceeded without colossal damage.
More specifically, he stated that
the ex-JPM traders have re-grouped,
and that silver will trade above $50
before December 31st of 2012. The
universal problem with JPMorgan is
that they make big enemies everywhere
they roam. When they inflict damage
on groups, using criminal deeds, those
groups invariably return in a better
fortified (sometimes better hidden)
position with revenge in their hearts
and deep determination in their eyes.

Upon my request, the Silver Doc provided some background on Wynter Benton, so
as to judge their authenticity and
reliability. He wrote, "Early
in 2011 during silver's run, they
posted numerous times forcasting impending
raids or spikes in silver, and were
accurate nearly to the minute. In
the fall of 2011 they posted that
they were planning on taking delivery
of a massive amount of physical silver
to crush JPM's short positions, and
that would take silver to $45 or something
like that by the end of November.
That was about the first week of October.
They had gone missing until this week,
in which they stated that MFGlobal
was taken down to prevent them from
taking delivery of the silver.
They have now regrouped, and are ready
to take on Blythe again. No one knows
if they are legit. They claim to be
JPM's former commodities traders whom
Blythe Masters fired around July of
2010, that they know the inner workings
of JPM's silver shorts, and they are
hotly motivated to take down Blythe
and JPM. They have also stated that
JPM has massive silver derivatives
losses that are triggered if silver
trades above $36/oz for sixty (60)
consecutive trading days. The May
2011 silver massacre sent silver back
under $36 only for one or two days,
sufficient for the 60 day period not
to be completed." Very interesting,
full of intrigue. It paints a picture
of extreme risk for JPMorgan, to play
out in perhaps mortal damage to their
precious metals desk in the next strong
leg up in the Silver price. One might
wonder how the US Intelligence agencies
might factor into any concerted effort
by Wynter Benton to give JPMorgan
a mortal blow in the strategically
important silver metal market. Langley
made its presence known last month
with a statement.

◄$$$ JPMORGAN NEARLY DOUBLED ITS SHORT SILVER POSITION SINCE JULY TO PREVENT
A RALLY PAST THE $50/OZ MARK. THE
BANK IS DESPERATE AND VULNERABLE.
$$$

Ted Butler is a loyal dedicated soldier. The Jackass learned several years ago
to listen closely to his factual work,
and ignore his analytic forecasts.
The former are excellent, the latter
not. Butler
offered a September report update.
"According to government data
for positions held as of September
4th 2012, I calculate JPM to be
short 130 million ounces, equal to
26,000 COMEX futures contracts. That
is up from the 70 million ounces JPMorgan
held two months ago. The 130 million
ounces is more than any country produces
for an entire year and four times
what the United
States mines
annually. It is such a large amount
of silver, that the silver price
would have traded above $50 recently,
had not JPMorgan sold short an additional
60 million ounces since July.
There can be no argument that the
short sale of 60 million ounces in
less than two months by one entity
would exert significant downward pressure
on the price." The giant
criminal bank conglomerate has turned
desperate, thus rendering itself highly
vulnerable.

◄$$$ GOLD MARKET INSTABILITY COULD BE A TREMOR BEFORE A BURST UPWARD.
THE SAME APPEARS TRUE FOR THE SILVER
MARKET. THE CURRENT PAUSE COULD BE
INTERRUPTED VERY QUICKLY WITH A STRONG
UPWARD LEG IN BOTH PRECIOUS METALS.
THE ANNOUNCED QE3 BOND MONETIZATION
PROGRAM CANNOT BE STERILIZED ANY LONGER.
A POWERFUL USDOLLAR DECLINE IS IMMINENT.
AS THE USDOLLAR RESERVE STATUS IS
THREATENED, THE GOLD PRICE WILL ZOOM
UPWARD. $$$

The USFed mandate on inflation moves next to an absurd mandate on jobs. They
will fail on both. Inflation will
be permitted by the USFed central
bank in order to produce jobs, in
the most heretic and misguided folly
ever seen in modern times. The
0% rate will stick until economic
growth arrives, but it will never
arrive, due to the damaging effect
from the 0% rate itself. This dog
is chasing its tail, with interruptions
only to devour its vomit. In the 1990
and 2000 decades, the United States consumed its
way to prosperity. Next the errant
nation with egregiously corrupted
leadership will print its way to prosperity
while doctoring the indexes that measure
what prosperity is. The USFed ignores
all Weimar chapters, after having rewritten the Great Depression chapter.
The nation emerged from the depression
only due to the Gold Standard and
ample industry. The nation has neither
today, and will therefore plunge into
a systemic failure.

The bottom line is the ruin of money, leading with the USDollar and Euro currencies.
Time appears to be running out for
the Syndicate titans and their grip
on the precious metals price. They
have too many enemies. The entire
global financial structure, and trade
payment system, are steering clearly
away from the USDollar. The instability
in the Gold & Silver markets is
vivid, a reverberation from the unstable
FOREX market. The precious metals
market required some time outs to
prevent an unstable rocket upward.
The JPMorgan machine needed a respite,
to enable a reload of massive naked
shorts to prevent the upward price
movement. JPM bought a few days or
weeks. May they meet Faustus in hell.
See the Nasdaq article (CLICK HERE).

The response in the Gold price has smelled a QE3 in bond monetization since
the summer months. The difference
is that this time, unlike the deceptive
Operation Twist, the bond purchases
will be unsterilized with new money
infused into the system. That
is a Golden supercharge. A major intermediate
reversal is underway, with a 1570
base, a 1780 top, which indicates
a 1990 Gold price target. The kicker
in the market is the broad mining
industry strike, which extends not
only from South Africa but to South America, in particular
Bolivia.
Gold supply will be inhibited. Expect
some regrouping with a pause at the
1720-1770 area, before a breakout
that captures the world's attention.
Once over 1800, the 1900 price resistance
will be overrun like a paper fortress
by angry mobs bearing torches and
sticks.

◄$$$ EVIDENCE OF THE IMPORTANT 36 LEVEL CITED BY THE EX-JPMORGAN CLAN
IS VERY CLEAR (NOT PROOF, ONLY SHED
LIGHT). CONSOLIDATION TIME IS OVER.
NEW MOMENTUM IS GATHERED. A BULLISH
CROSSOVER WILL ADD TO ITS POWER TO
SLAM THE 43 RESISTANCE AND WORK TOWARD
NEW HIGHS. THE DYNAMICS FOR SILVER
ARE EXCELLENT, WITH SHORTAGES IN SUPPLY
AND HEIGHTENED DEMAND. $$$

◄$$$ SOME BIG FACTORS ARE ALIGNING WELL FOR GOLD. STRONG RUSSIAN DEMAND,
BURGEONING CHINESE DEMAND, AND HAGGLES
OVER THE USGOVT DEBT CEILING, PRECISELY
WHEN QE3 BOND MONETIZATION WILL DAMAGE
THE USDOLLAR. $$$

Consider several factors, all disjointed. A) Vladimir Putin is frantically stockpiling
gold as fast as he can. The Russian
Govt has more than doubled its official
gold reserves in the past five years,
according to the World Gold Council.
The real story is they have increased
their gold reserves more than 10-fold,
according to my source who has first-hand
knowledge of vast tunnel vault systems
under the Kremlin from consulting
work in the 1990 decade. He has Russian
two-fisted clients B) Gold shipments
from Hong Kong to China surged to
458.63 metric tons in the first seven
months of 2012, up from 103.09 metric
tons in all of 2011. We have also
seen outsized sequential monthly increases
for China as recently as June to July. On a year over
year basis the data is even more shocking.
China in July for example
purchased 75.84 metric tons of gold,
double the volume compared to July
2011. C) Political factors are aligning
with the demand season that builds
toward the December holidays. The
USGovt debt ceiling will be breached
either November or December 2012,
leading to enormous uncertainty exactly
when the QE3 impact on the USDollar
will be felt. A lame duck President
might be negotiating a debt ceiling
hike, while the USFed goes crazy debasing
the USDollar currency. D) China
has declared war on the USDollar,
simply stated, no exaggeration, the
gloves off.

◄$$$ SILVER MINE OUTPUT IS IN GREAT TROUBLE FROM A YIELD FACTOR. SILVER
DEPENDS INCREASINGLY UPON BASE METAL
PRODUCTION PROJECTS, WHILE THE SILVER
YIELD AT PRIMARY MINES IS IN SHARP
DECLINE. THIS BODES WELL FOR THE SILVER
PRICE AND BADLY FOR THE MINING STOCKS.
$$$

A unique but strange phenomenon affects the silver price. When the global economy
is sluggish, demand for industrial
base metals is reduced. That in turn
shuts down some mine production, where
silver is a by-product. So in slow
times, silver output falls even if
physical investment demand is fast
on the rise. Like now! Worse, ore
grades are on the decline for both
primary silver and base metal mine
projects. Deposits are old and thin
and deep, thus challenging. As far
as silver output goes, a nice breakdown
is provided by the World Silver Survey.
The primary silver mine production
fell from 30% in 2010 to only 29%
in 2011. The reason attributed
was that a few big primary silver
mines saw ore grades fall substantially.
According to survey, among the larger
mines, grades fell at Arcata (-29%),
Alamo Dorado (-29%), Fresnillo (-16%),
and Pallancata (-13%). The four mines
are run by Hochschild Mining in Peru, Pan American Silver, and Fresnillo. These
are significant declines that contribute
to the global silver output decline.
In past Hat Trick Letter reports,
the silver market supply deficit has
been a topic, which has lasted for
almost a full decade.

Hardly anyone in the mining community or investment community is paying much
attention to this trend. These physical
forces hampering the future silver
supply will affect the price dynamics
in such a way as to force the silver
price up to nosebleed levels. The
supposed industry analysts forecast
much higher silver production in the
next 10 years. They might be delusional,
since silver ore grades are falling
quickly. At the same time, mine worker
strikes are cropping up on all poorer
continents. The mine industry spokesmen
actually claim that silver mine operators
are mining different ore grades for
profitability. The claim is easily
dismissed. The Silver Doctor argues
to the contrary, effectively so. For
mining firms to change mining ore
grades in pursuit of higher profitability,
they must mine HIGH ORE GRADES when
the price of silver is low, and mine
LOW ORE GRADES when the price of silver
is high. This is not happening, rather
the opposite. Lastly, 71% of silver
came to market as a by-product of
base metal and gold mining in 2011.
If the market is going to rely upon
future base metal production for the
lion share of silver production, then
big trouble lies ahead. Base metal
mines are seeing a decline in ore
grades as well. These physical forces
bearing down on the market are going
to send the Gold & Silver prices
skyward, precisely when major currencies
are being debased in accelerated manner.

##
USECONOMY, DECAY & STENCH

◄$$$ THE LABOR MARKET REMAINS A WRECKING ZONE, STUCK IN A RUT. TO CLAIM
THAT JOBS HAVE BEEN CREATED AND THE
USECONOMY IS ON THE MEND IS THE STUFF
OF FOOLS AND POLITICIANS SEEKING FOUR
MORE YEARS. THE CONTRADICTION IS EASY,
SEEN IN LENGTH OF TIME OUT OF WORK.
$$$

The Lehman Brothers failure & bust marked the beginning of a long drawn
out path that will inevitablely result
in systemic failure of the USEconomy,
yet to be recognized by the highly
paid paper merchants. Gold is the
surviver, the arch-enemy of paper
assets. When the nation took the bait
and bit hard on the lunatic notion
of basing economic sustenance and
growth upon the home equity bubble,
it guaranteed the death of the banking
system and household wealth. Later
comes the systemic failure, with Gold
the lone survivor, along with select
hard assets like energy deposits and
ripe farmland.

◄$$$ AUGUST JOBS GROWTH WAS AGAIN PATHETIC, WITH ALL THE GAINS COMING
FROM THE FICTIONAL BIRTH-DEATH MODEL.
REVISIONS WERE DOWNWARD FOR JULY AND
JUNE, A HARSH SIGNAL. JOBS DECEPTION
IS LONGSTANDING AND ENTRENCHED. $$$

Jobs growth slowed more than expected in August, which provided a big green
light for the USFed to pump up the
volume and paper party on. The sluggish
USEconomy demands action, drastic
action. The August Non-Farm Payroll
data came in at a 96 thousand job
gain, complete with the usual distortions.
The jobless rate reported by the USDept
Labor was 8.1%, down from 8.3% in
July. But the benefit was the result
of more people falling off the state
jobless insurance rolls. The labor
participation rate fell to 63.5%,
the lowest rate since September 1981,
and rarely mentioned in the press
since it contradicts the improvement
presented. No cause for celebration
here. Two important notes. The recent
monthly revisions were both downward
by 41 thousand in total. The July
figure was moved from 163k to 141k.
The June figure was moved from 64k
to 45k. When revisions are downward,
it means their assumptions are contradicted,
the usual fare. The second note is
that almost the entire +96k gain
was due to the fictional Birth-Death
Model, which posted a bonus of
87k jobs from fiction. Small business
is not ramping up. See the Yahoo Finance
article (CLICK HERE).

◄$$$ THE HOUSE BUST DATA UPDATE FEATURES THE SAME OLD STORY. BANKS KEEP
THEIR SHORT SALES OFF THE HOME PRICE
METER FOR THE NATIONAL PICTURE. HOME
FORECLOSURE STUFFING CONTINUES IN
A BIG WAY, AS THE FEBRUARY MAJOR BANK
ACCORD SOLVED NOTHING. NEW JERSEY STEPPED FORWARD PAST NEVADA AS A WRECKED MARKET. $$$

Doctor Housing Bubble reports that the Case Shiller home price index saw its
first rise in eons, but it is a distortion.
He claims the mix of sold homes has
changed. My view is that short sales
by the big banks are not counted.
So distortion is huge, permitted,
even desired. Tragically, 48% of
young people under 40 years of age
who hold a mortgage are sitting in
homes with negative equity. Banks
are dumping homes on the market. The
practice of enabling low down payments
has come back again to bite the banks.
They are defaulting en masse. The
reduced offerings of homes by the
public reflects the distress and discouragement,
many stuck without ability to take
action. It is not a healthy vibrant
market. The pace of home sales remains
at rock bottom. See The Dr Housing
Bubble article (CLICK HERE
and HERE).

Back in November 2010, a collapse in the foreclosure process occurred as banks
no longer had leverage to evict homeowners
who refused to pay their monthly mortgage
bills. The banks could not confirm
they actually had rights to the underlying
mortgage. The home foreclosure process
slowed with ferocity, from around
330,000 homes per month to roughly
250,000 per month. The February RoboSigning
Mortgage Settlement did not resolve
anything, since the supply lines continued
to fill. The foreclosure pipeline
was never unclogged. RealtyTrac reports
in August the FC pace fell to a level
of 193,508 total. Ever since the
advent of fraud-closure, the average
monthly foreclosure total has dropped
from a 330k per month average to just
219k per month, and still is declining.
The market is not clearing inventory.

The answer to the puzzle is what Tyler Durden calls basic foreclosure stuffing.
Properties are not entering the
foreclosure pipeline since they
are effectively kept out of inventory,
even shadow inventory, and thus the
distressed end market. Durden calls
the practice a form of subsidy to
the housing market, as month after
month less inventory enters the market
than otherwise should. Currently
a 2.5 million backlog of properties
sit in abeyance, waiting to be foreclosed
upon, which are being completely ignored
by banks. A stuffed foreclosure channel
is obvious. The upshot to the
homeowners is that they live mortgage-free,
while the banks refuse to begin the
foreclosure process. Feel free to
believe the housing market has improved
because some oddball Case Shiller
home price index can be doctored higher
by ignoring short sales by banks,
and realizing the benefits of a couple
million homes where tenants live for
free. Well that is typical of US economic accounting and
statistical abuse. The Jackass aint
stupid. The housing market is still
wrecked. The confusion is growing.
See the Zero Hedge article (CLICK
HERE), which shows
a fine chart.

New Jersey has surpassed Nevada in 2Q2012 in the percentage of homeowners with seriously delinquent
loans, those 90 days late or in foreclosure,
according to the Mortgage Bankers
Assn. Only Florida had a higher rate of serious delinquencies, which fell 1.2
percentage points from a year earlier
to 17.5% of mortgages. The rate in
New
Jersey rose 1.3 percentage points
to 12.7%, by comparison. New Jersey is a judicial review state. To conduct a foreclosure, a
process must be followed which delays
seizures and thus helps borrowers.
It keeps down home prices for years
as properties remain subject to repossession
and then may be sold at a discount.
While home values increased in July
from a year earlier in 42 states,
to be sure with plenty of CS distortions
(cited above), home prices in New Jersey fell 0.8%, according to CoreLogic. See the Bloomberg article
(CLICK HERE).

◄$$$ USECONOMY HAS MOMENTUM IN REELING AND KEELING, INDICATED BY THE CAPEX.
NO RECOVERY OCCURRED AFTER THE 2008
EXTREME SHOCK, WHEN THE FINANCIAL
PLATFORMS BROKE. BUSINESS INVESTMENT
PRECEDES ACTIVITY IF NOT EXPANSION.
IT IS NOWHERE. $$$

The durable good orders can be confusing, given the sporadic huge aircraft orders
that skew the data. Also the endless
war has consistent order flow devoted
to destructive purposes, considered
positive by hack economists. The
data series to watch is the non-defense
business investment excluding transportation.
It is often called CAPEX, for baseline
capital expenditures. The business
sector alone minus aircraft provides
an excellent large core for the USEconomy.
It has been in decline for a full
twelve months, having turned negative
for the last few months in succession,
with no solid recovery following the
2009 impact at the bottom of the cliff.
A grand misconception is engrained
in economic thought for the US, where capitalism is a
lost concept. Income enables consumer
spending, but more importantly business
investment leads to income. The nation
has no cohesive concept of what legitimate
income means. Experts constantly clamor
for putting money in consumer hands,
regardless if it is from tainted sources.
It must come from business formation,
a system which collectively applied
over an economy is known as capitalism.

As of July data reported in late August, the year over
year change in capital goods orders
has sunk into negative territory.
The recent contraction since February
has been steep, a big danger signal. The important quarterly sequential change rate shows contraction. The morass
in Europe and the disconnect in China will serve
up strong headwinds. The US
has suffered a grand blow to investment,
after so much occurred in China in the last
decade. The US
fiscal cliff looms as the initiative
will be to cut spending. The level
of political brinkmanship has turned
lethal.

◄$$$ US-FIRMS CONTINUE TO MOVE OVERSEAS, DUE TO TAXES. DESPITE SEVERAL
AWKWARD REFORM ATTEMPTS, THE UNITED
STATES REMAINS THE HIGHEST TAXED NATION
IN THE WORLD. THE POLITICIANS SEEM
IGNORANT OF THE DISCOURAGEMENT, AS
THEIR BUSINESS SKILLS ARE NOWHERE.
EXPECT TAX REFORM TO RAISE TAXES IN
HIDDEN WAYS, NOT REDUCE THEM SINCE
THE MANDATE WILL BE TO REDUCE THE
FEDERAL DEFICIT AND THUS AVOID THE
FISCAL CLIFF. $$$

The national leadership talks about job creation, while they step on the necks
of the business sector. The business
level stupidity is universal, as law
degrees needed to fashion legislation
has little extended value to aid in
shaping bills that result in economic
growth. Rebellion among US corporations
is reaching a fever pitch. Large
US firms are moving their
headquarters and central offices to
foreign soil, as a direct response
to punitive taxes and USGovt hypocrisy.
A 2004 federal law was passed with
a motive to halt the practice of companies
moving overseas. The heavy tax burden
remains a primary concern. Some corporations
anticipate worse tax rates as the
USGovt spins out of control in absent
leadership and escalating debts. The
USCongress might revamp its tax code
next year, with a plan to reduce the
budget deficit. They cling to the
notion that higher tax rates bring
greater tax revenue, when the exact
opposite is the case. They are plain
stupid on matters of economics.

Some big firms claim that growth prospects lie abroad, and they want to be closer
to the where their clients are, to
exploit geographic reach. Take as
example the risk management firm Aon
PLC, which relocated to the United
Kingdom in April.
The relocation will result in Aon
reducing its tax rate, which averaged
28% over the past five years, to 23%
over time. The bottom line is about
$100 million in annual savings, enough
to justify the decision. Since 2009
alone, at least ten US-based public
companies have relocated their incorporation
address abroad or announced plans
to do so, according to the Wall Street
Journal. That is an increase from
just a few from 2004 through 2008.
The companies that have moved recently
include manufacturer Eaton Corp, oil
firms Ensco International and Rowan,
as well as DE Master Blenders, a spinoff
of Sara Lee. Witness a rebellion.
It is amazing that the departing companies
do not cite the poorly educated worker
base, the knucklehead welfare state,
or the endless wars. They simply cite
the obvious high US
tax rates.

Eaton is a 101-year old maker of components and electrical equipment based in
Cleveland Ohio. In the midst of an acquisition
of Cooper Industries in May, the Eaton
executives announced plans to maintain
factories, offices, and other operations
in the United
States, but the
official place of incorporation would
be relocated to Dublin
Ireland.
When the deal was announced, they
cited tax benefits would save the
company about $160 million annually,
beginning next year. The Eaton CEO
Alexander Cutler has been an outspoken
critic of the US corporate tax code. He said, "We have
too high a domestic rate and we have
a thoroughly uncompetitive international
tax regime." Without remedy,
US corporations simply leave and reap
big benefits.

The moves by offshore oil rig operating firms Ensco and Rowan followed rivals,
in order to remain competitive. In
moving from Dallas
to the UK in 2009, Ensco followed rivals such as Transocean,
Noble, and Weatherford Intl which
each had abandoned the highly taxed
US shores. The Ensco executives
openly stated the need to achieve
a tax rate comparable to that of its
global competitors. Their effective
tax rate has declined from 19% in
2009 down to 10.5% in 2Q2012. The
savings will total over $100 million
per year. After nearly 70 years since
the end of World War II, the USGovt
cannot seem to find its ass with either
hand, which usually are in Wall Street
pockets. Lawmakers of both political
parties have said the US corporate tax code needs a revision, expected
to come next year. Expect them to
raise taxes in hidden ways, not reduce
them. They are desperate, corrupt,
and stupid, a lethal combination.
One common source of concern is the
top corporate tax rate of 35%, the
highest among developed economies.
By comparison, Ireland's rate is 12.5%.

The Obama Admin has proposed lowering the rate to 28%, while Republican rival
Mitt Romney has proposed 25%. In my
view, unless the corporate tax rate
is substantially reduced, like to
the 20% to 25% range, businesses will
not pay attention. A big unspoken
problem is distrust of the USGovt
for its fickle manner, its hypocrisy,
its block headed decisions, and its
instability. The United States is unique in another highly destructive
manner pertaining to taxes. US
corporations are put at a huge disadvantage
because their profits earned abroad
are taxed. Most developed countries
tax only domestic earnings. However,
loopholes exist. US multinational firms often pay far less than
35% as they utilize the option of
deferring the payment of US taxes
on foreign earnings until they are
brought back to the US. This phenomenon explains why US firms hold
$trillions in overseas subsidiary
banks, away from the grubby USGovt
hands. Look for the Obama Admin to
limit the benefits of tax deferral,
seen to be a tax enhancement technique.
The Obama speeches like the State
of the Union (lousy) are loaded with rhetoric, promises, and smiles, with talk
of creating US jobs but without the
slightest scintilla of comprehension
of either capitalism or tax incentive.
Marxists never understand and always
wonder why the dance floor is empty.
Witness an empty chair. See the Yahoo
Finance article (CLICK HERE).

◄$$$ FOOD STAMP USAGE CONTINUES TO RISE IN DEFIANCE OF ANY CLAIMED USECONOMIC
RECOVERY. THE THIRD WORLD TRAITS ARE
BECOMING DEEPLY ENGRAINED, IN A LAND
OF UNDERCLASS.
IN A FEW YEARS, PERHAPS 20% OF THE
AMERICAN POPULATION WILL BE GIVEN
RICE & BEANS LIKE PEOPLE IN BANANA
REPUBLICS. $$$

The USDept Agriculture changed the Food Stamp program to some vapid name SNAP
(Supplemental Nutrition Assistance Program) that sounds
great. Wrong footed management prevails.
Unfortunately, its enrollment is rocketing
upward even as the nitwit USGovt administrators
are eager to offer it to undocumented
Mexicans. The facts and figures are
cited every few months in the Hat
Trick Letter as a reminder of passing
through the gates to the Third
World. The number of Americans
on Food Stamps has grown from about
17 million in 2000 to 31.9 million
when Obama took office in January
2009 to 46.4 million today. The
USGovt spent a whopping $71.8 billion
on the food stamp program in 2011.
In the last four years the number
of participants in the SNAP program
with the snappy name and open doors
increased by 64.7%, while a 114% rise
in program cost has been realized
over that time period. Since 2000,
the program cost is up by 395%. As
for participation, it too has grown
wonderfully. Since 2000, the number
of participants is up 170%. It is
an American success story which adds
notably and nobly to the USGovt debt.

◄$$$ THE EXPANDED USGOVT DOLE ASSURES OUTSIZED FEDERAL DEFICITS AS FAR
AS THE EYE CAN SEE. OVER 100 MILLION
AMERICANS ARE ENROLLED IN AT LEAST
ONE WELFARE PROGRAM RUN BY THE FEDERAL
GOVERNMENT. THE MEDICARE ROLLS RECEIVE
PROPER ATTENTION AS PART OF A BACK-BREAKER
PROGRAM. THE WELFARE STATE IS OUT
OF CONTROL. THE USGOVT DEFICITS ARE
INSTITUTIONALIZED AND WELL ENGRAINED,
TO CONTINUE UNTIL THE DEBT DEFAULT.
$$$

The entitlement and aid programs have grown extraordinarily large. Their size
indicates extreme distress within
the USEconomy. The number on USGovt aid programs eclipsed an important
mark recently. The Food Stamp program
has gathered attention, with its ranks
having reached shocking levels. The
benefits of Medicaid are also out
of control, with rapid growth entrenched.
This is not the routine mainstream
Medicare, but the aid to those too
poor to manage medical costs. It is
a medical welfare program. More Americans are dependent upon the federal government than ever before in
US history. According to the Survey of Income
& Program Participation conducted
by the US Census, well over 100 million
Americans are enrolled in at least
one aid program run by the federal
government, which constitutes about
one third of the entire population
of the country. The Social Security
and Medicare recipients are not even
included. The safety net has become
a quasi foundation. The socialist
nation is extremely well rooted.

Focus on other areas of the welfare state. Medicaid is growing without reins.
The number of Americans on Medicaid
grew from 34 million in 2000 to 54
million in 2011, almost a 60% rise.
Back in 1965 only about one out
of every 50 Americans was on Medicaid.
But now one person in six in the entire
country is on Medicaid. Analysts project
that ObamaCare will add 16 million
more Americans to the Medicaid rolls.
Expect such an estimate to be low
when reality strikes. Other federal
welfare programs are exploding in
size as well. For example, federal
housing assistance increased by 42%
between 2006 and 2010. The chart posted
was prepared by a Senate Budget group.
The growth is startling. Be assured
that USGovt deficits, even apart from
the endless sacred narco wars, will
be well over $1 trillion every year
until the debt default that shakes
the world to its core. The debt is
long past unmanageable.